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HomeMy WebLinkAbout1998-03-03 Support Documentation Town Council Evening Session VAIL TOWN COUNCIL EVENING MEETING TUESDAY, MARCH 3, 1998 7:30 P.M. IN TOV COUNCIL CHAMBERS AGENDA NOTE: Times of items are approximate, subject to change, and cannot be relied upon to determine at what time Council will consider an item. 1 . CITIZEN PARTICIPATION. (5 mins.) 2. CONSENT AGENDA: (5 mins.) A. Approve the Minutes from the meetings of February 3 and 17, 1998. 3. Presentation of Vail's Youth Recognition Award to Collins Canada of the Vail Mountain School and Traci Phelan of Battle Mountain High School. (5 mins.) 4. Resolution No. 5, Series of 1998, a Resolution Establishing the Time for Pam Brandmeyer Council Meetings. (10 mins.) ACTION REQUESTED OF COUNCIL: Approve, modify, or deny Resolution No. 5, Series of 1998. BACKGROUND RATIONALE: On February 17, 1998, the Vail Town Council adopted Ordinance No. 2, Series of 1998, which provides that the meeting time of Council's regular meetings shall be established biennially at Town Council's first annual meeting. Therefore, it is appropriate at this time to adopt a time for the commencement of the regular meeting which will continue until the first organizational meeting following the next regular municipal election to be held on November 2, 1999. It had been suggested by Council that the appropriate time is 7:00 p.m. 5. Review and discuss the infrastructure repairs, street scape design, public Larry Grafel art elements, project estimated budget, and construction schedule for Todd Oppenheimer Seibert Circle capital improvement project. (15 mins.) Nancy Sweeney ACTION REQUESTED OF COUNCIL: Approve, modify as necessary, defer, or deny the project. If the project is approved, additionally request that Public Works/AIPP be allowed to enter into a contract with Jesus Morales for the central amphitheater and art pieces. BACKGROUND RATIONALE: The Town Council during the 24 February work session directed staff to review the project again and bring back a project that is capped at $634,500. It was to include the Morales are . elements, to retain existing peripheral street scape improvements that are on private property, and, if there were any additional expansion of the project, to include any other art pieces, it would have to be financed fhrni inh nriw~+a fi inr! STAFF RECOMMENDATION: Approve the project design and project budget at $634,500. 6• Discussion of community engagement process for developing a Russ Forrest dedicated funding source for housing and identifying land opportunities Suzanne Silverthorn for future parks and recreation, and the work plan for implementing Andy Knudtsen Option 1. (30 mins.) Todd Oppenheimer ACTION REQUESTED OF COUNCIL: Review problem statement, givens, public involvement process, and the work plan for implementing Option 1. BACKGROUND RATIONALE: The Town Council has identified the creation of a dedicated funding source for housing as a high priority action. In addition, the Town has the need to identify land opportunities for housing, parks, open space, and other community facilities. At the February 17th Council work_ session, staff presented four options for achieving the CounciPs goals related to housing. On February 24th the Town Council directed staff to implement Option 1. Option 1 would , provide two products: 1) an estimate funding level needed for housing and a rational for that funding level; and 2) a land opportunities map that would identify properties appropriate for housing, parks, open space, and other public facilities. This process would be complete by June 31, 1998. STAFF RECOMMENDATION: Approve problem statement, givens, public involvement process, and the work plan for implementing Option 1. 7. Adjournment - 8:40 p.m. NOTE UPCOMING MEETING START TIMES BELOW: (ALL TIMES ARE APPROXIMATE AND SUBJECT TO CHANGE) I I I I I I I THE NEXT VAIL TOWN COUNCIL REGULAR WORK SESSION WILL BE ON TUESDAY, 3/10/98, BEGINNING AT 2:00 P.M. IN TOV COUNCIL CHAMBERS. THE FOLLOWING VAIL TOWN COUNCIL REGULAR WORK SESSION WILL BE ON TUESDAY, 3/17/98, BEGINNING AT 2:00 P.M. IN TOV COUNCIL CHAMBERS. THE NEXT VAIL TOWN COUNCIL REGULAR EVENING MEETING WILL BE ON TUESDAY, 3/17/98, BEGINNING AT 7:30 P.M. IN TOV COUNCIL CHAMBERS. illllll Sign language interpretation available upon request with 24 hour notification. Please call 479-2332 voice or 479-2356 TDD for information. C:WGENDA.TC COUNCIL FOLLOW-UP LTQUESTIONS FOLLOW-UP SOLUTIONS ~ ~ 998 LARRY/GREG H.: With the increased speed from the Main At the time of the construction of the mE in Vail roundabout, this issue was 2l17/98 CROSSWALK Vail roundabout pourin g westbound on South Fronta ge d i s c u s s e d. L i n e s c a n b e p a i n t e d. S t a ff w i l l r e v i s i t. See a ttac he d memo Sybill Navas Road, should a crosswalk be painted to help draw drivers' from Larry. attention to the fact pedestrians are crossing from the police tlepartment to the Holiday Inn side of the Frontage Road. 2/24/97 VAIL PASS BIKE PATH LARRY: Since the west side of the path is in Region 1(John Kevin Foley Unbewouf???), perhaps a different strategy can be worketl out to repair the numerous potholes, etc. Cooperating parties: Trails Committee from the ECRTA, TOV commitment of equipment/operators, and CDOT. x February 26, 1998 Page 1 , 4VAILi TOWN OF 1309 Yail Yalley Drive Department of Public Works & Transportation Yail, Colorado 81657 970-479-21 S8 / Fax 970-479-2166 MEMORANDUM TO: Vail Town Council Town Manager FROM: Larry Graf Dire r of Pu (ic Works & Transportqtion DATE: February 27, 1998 SUBJECT: Pedestrian Crossing Striping A council member requested that staff look at striping the pedestrian crossing located at the east end of the police building, across the South Frontage Road to the Holiday Inn sidewalk. The Town of Vail currently does not have any painted crosswalks, anywhere within the town boundaries. The decision not to stripe pedestrian crosswalks was based on several factors. They are; • The striping of crosswalks were viewed as being too urban. • Striping is not compatible with the aesthetics/ambiance standards that the town is striving to achieve through it's street scape plan. • Research has shown that striped crosswalks provided a false sense of security for pedestrians usitlg them. • There is no significant reduction in preventing pedestrian-vehicle accidents when crosswalks are striped. It is my recommendation that we do not stripe the intersection. Pedestrians, regardless of the intersection, must continue to use eaution when crossing any street. xc: Pam Brandmeyer, Assistant Town Manager Greg Morrison, Cluef of Police Greg Hall, Town Engineer ~ ~ RECYCLED PAPER MEMORANDUM TO: Town Council Planning and Environmental Commission FROM: Lionshead Redevelopment Master Plan Team Mike Mollica/Dominic Mauriello DATE: March 3, 1998 . SUBJECT: Stage 3--Lionshead Master Plan--A joint work session to continue discussions regarding height, mass and density parameters. The culmination of Stage 3 will be the adoption of a rationale and desired outcomes which establish 'the regulatory framework for height, mass and density of buildings in the Study Area. "The goal of this joint worksession is to provide the PEC and Council with additional background information with regard to: a) floor-to-floor heights; b) geographic distribution of building heights; c) bonus heights; d) development standards; and e) density parameters. The Master Plan Team is looking for direction on the above 5 items. Any outstanding issues and concerns should be articulated and the team will be prepared to directly address those concerns and issues at the next worksession. 1. STAGE 3 SCHEDULE Stage 3 of the Cionshead Master Plan has been in-progress since May of 1997. At this time, we are nearing completion of the third stage of the Master Plan and would propose the following schedule: Tuesday, March 3---- Joint PEC/Council work session. Monday, March 9---- Final PEC recommendation on Stage 3. Tuesday, March 10--Council afternoon work session (if necessary). Tuesday, March 17--Council aftemoon work session; and --Council evening meeting--DECISION on Stage 3. , Please keep in mind that this proposed schedule can be modified if additional meetings are deemed necessary. *VAR Town~~ I1. OUTSTANDING ISSUES RELATED TO STAGE 3 The following is an overview of the Stage 3 outstanding issues which staff believes need further discussion and consensus: A) Determine the appropriate floor-to-floor height. Staff has contacted the following architeets about floor-to-floor requirements on projects they are working on. All assume at least a 9' floor-to-ceiling height for residential/lodge units. The results are as follows - - Henry Pratt, Gwathmey Pratt, Vail Stated he is working on the Marriott and is finding an average of 11' floor-to-floor as being tight. The Liftside project (Cascade Village) was constructed at 10.5' floor-to-floor and was very tighUnot very manageable. (For a 5-story building his average wou/d be 11' f/oor-to-f/oor.) Steve Isom, Isom and Associates, Eagle Stated that for a commercial building, the first floor needs 10' floor-to-ceiling and 15" of structure resulting in 11.25' floor-to-floor. For residential levels with 9' ceilings, one needs 10.25' floor-to-floor. (For a 5-story building his average wou/d be 10.45' floor-to-floor.) Bill Pierce, Fritzlen Pierce Briner, Vail Stated that the first floor commercial needs to have a floor-to-floor height of 14'. He stated that 10.5' for other floors can be done but is difficult. An 11' floor-to-floor works, but 12' would be ideal. (For a 5-story building his average wou/d be 11.6' f/oor-to- f/oor.) Galen Aasland (Architect/PEC Member), Vail Stated that a project he is working on in Idaho had an average 10.9' floor-to-floor. Recommends a first floor at 16' and 11' for other floors. Stated that one might need more than 9' ceilings for quality condos. (For a 5-story building his average wou/d be 12' floor- to-floor.) Gordon Pierce, Pierce Segerberg Architects, Vail Stated that a 9` floor-to-floor is not realistic. Stated that the first floor commercial needs to be 12' minimum for the floor-to-floor. Recommends that the upper floors (residential) be a minimum of 10' floor-to-floor. (For a 5-story building his average wou/d be 10.4' f/oor-to-f/oor.) Terry Willis, Urban Design Group, Denver Terry stated that in "luxury condos", such as in Bachelor Gulch, there needs to be 15' floor-to-floor for the first level retail. Then he recommends that there be 11' floor-to-floor for the upper residential levels. (For a 5-story building his average wou/d be 11.8' floor- e to-floor.) Cottle Graybeal Yaw (CGY) Architects, Aspen CGY has provided cross section drawings (see attached) of typical first floor retail and upper level residential units. The section drawings indicate a 14.5' floor-to-floor for the fower level commercial and an 11-11.5' floor-to-floor for the upper level residential. The 6" difference is due to two different types of heating systems (forced air vs hydronic 2 baseboard). (For a 5-story building his average wou/d be 12.1' floor-to floor.) In summary, the average floor-to-floor height recommended by the architects surveyed above is 11.3. Examples of floor-to-floor heights in buildings currently under construction in Vail: Austria Haus: First floor - 10' Other floors - 11.44' (average) Average - 11.08' (based on 4 f/oors) _ International Wing: First floor - 16' Other floors - 9.96' (average) Average - 11.97' (based on 3 f/oors) B) Geographically identify permitted heights of floors, plus a roofl and establish the acceptable "bonus heights" and associated perFormance criteria for achieving the bonus height. The proposed building height guidelines for the Lionshead Master Plan are outlined as follows: 1. Maximum by-right height limit based upon geographic location of property within the study area. a. Area "A" -(see map) - This area is characterized by existing single family and duplex homes. It is proposed that any new development in this area conform to this fabric and be limited to the existing development standards in place (maximum height of 33' for a sloping roofl. b. Area "B" -(see map) - This area is currently open space, located south of Gore Creek and is characterized by wetlands, steep embankments and undeveloped open space. It is proposed that this area be maintained as an open space resource, with no structures permitted. However, any open, recreation-type support structures that the Town of Vail may see as appropriate in the future shall be limited in height to 1-story, plus a roof. c. Area "C" -(see map) - This area is characterized by the commercial core and multi-family residential uses. It is recommended that structures in this area have a by-right height limit of five stories, plus a roof. Structures in this area also are eligible for bonus heights based upon their orientation and conformance to performance criteria. 2. Roofs. The roof height allowance is defined as the increase in height from the maximum permitted eve height, to the ridgeline of the roof. 3 a. Sloped roof requirement. Due to the desire for a consistent, high quality, alpine architectural style in the Lionshead area, it is proposed that flat roofs no longer be allowed on any new construction, building additions or rehabilitation to existing buildings. b. By-right roof allowance. In conjunction with the requirement for a sloping roof, it is recommended that every building be required to have a minimum 5/12 pitch roof, with a maximum by-right roof height of 14 feet, (this is based on the height of a 5/12 pitched roof on a typical 65' wide, double- , loaded building). . 3. Bonus Heights. The proposed height bonuses for Area "C" of the Lionshead study, area are divided into two sections - additional stories (building height before the roof starts), and additional roof height. a. Additional stories: Any structures that are predominately oriented north- south, (with average double-loaded corridor), are eligib/e for a bonus sixth story, according to conformance with the performance criteria. b. Bonus roof height allowances: Based on the predominant orientation of the building and the conformance to perFormance criteria, it is recommended that the following bonus roof allowances be created: 1. 9/12 pitch with a maximum roof height of 25' (this height is based on a 9/12 roof on a typical 65' wide double-loaded building). This bonus roof height would be available for all buildings in Area "C" regardless of their orientation, if they meet the performance criteria. This roof height will allow for the creation of a narrower "loft" story inside the roof. 2. 12/12 pitch with a maximum roof height of 33' (this height is based on a 12/12 roof on a typical 65' wide double-loaded building). This bonus roof height would be available for any building in Area "C" that is predominately oriented north-south and meets the pertormance criteria. This roof height will allow for the creation of an additional story, plus a loft space inside the roof. 4. Exclusions. The following exclusions to by-right or bonus building heights are proposed in order to protect the character and visual quality of certain spaces within the Lionshead Study Area. It is suggested that building setbacks, build-to lines and architectural step-backs will be detailed in the architectural and site guidelines. a. Any building adjoining the Gore Creek stream corridor or adjoining the ski yard shall be limited to a 4-story maximum permitted eve height, and must conform to the architectural design guidelines for buildings fronting these areas. However, this is not intended to prevent a building from attaining its bonus height after stepping back from the restricted building face. 4 b. Any part of a building that is south facing, north facing, or adjoining the Lionshead retaif mafl area sha(f be limited to a 5-story maximum permitted eve height. This is not intended to prevent a building from attaining its bonus height after stepping back from the restricted building face. c. All buildings in Area "C" shall conform to the Lionshead architectural and site design guidelines, which may influence the initial eve height and building step-back requirements. d. AII building shall respect the established public view corridors. 5. Maximum Building Height Synopsis. The following maximum attainable building heights under the above proposals are based on an assumed 11.5' floor-to-floor height. a. 71.5 Feet - Maximum By-Right building height, with no bonus story and no bonus roof height (57.5' for five stories, plus 14' for the roofl. b. 82.5 Feet - Building height with no bonus stories and the initial bonus roof height, (57.5' for five stories, plus 25' for the roofl. c. 90.5 Feet - Building height with no bonus stories and the maximum bonus roof height, allowed only for north-south oriented buildings (57.5' for five stories, plus 33' for the roofl. d. 102 Feet - Building height with bonus sixth floor and maximum bonus roof height, allowed only for north-south oriented buildings (69' for six stories, plus 33' for the rooo. C) Development Standards: a) GRFA--staff recommends that the existing GRFA regulation (80% of buildable area) be eliminated for properties in the Lionshead core area. b) Site Coverage--staff recommends that the existing 70% site coverage limitation be eliminated for properties in the Lionshead core area. c) Setbacks--staff recommends that the existing 10-foot setback requirement be eliminated for properties in the Lionshead core area. It is suggested that building setbacks be delineated in the architectural and site guidelines, in conjunction with Building and Fire Code requirements. d) Landscaping---staff recommends that the existing 20% minimum landscaping requirement be eliminated for properties in the Lionshead core area. D) Density (units/acre) standard-maintain current standard of 25 units/acre. AU's, EHU's and fractional fee units (FFUs) would not count towards density. 5 Staff has outlined some ideas on evaluating density in the Lionshead commercial core area: 1. Retain the existing density provisions (CC2 - 25 units/acre, HDMF - 25 units/acre, MDMF - 18 units/acre). 2. Excfude accommodation units (AUs), employee housing units (EHUs), and fractional fee units (FFUs) from the calculation of density. This may encourage the development of these unit types. Dwelling units (DUs) would only be allowed up to the existing density allowance (i.e. X units/acre).. Generally, building height, architecfural and site guidelines, and parking requirements will determine the " carrying capacity of the site (i.e how many units can be accommodated on a site). 3. The gross square footage added to a structure via the height bonus (sixth floor and floor area in the roofl must be added in the form of AU's, EHU's or FFU's. This is not to say that these uses must be located on the sixth floor and in the roof area, but that the additional gross square footage must be located somewhere in the structure. 4. AUs and EHUs shall meet minimum requirements to ensure that quality units are constructed. Examples would include: AU - 9' ceiling height. EHU - 450 sq. ft. minimum and 9' ceiling height. 5. Allow any properties which are currently nonconforming with respect to density to rebuild to existing/constructed density. F:\EVERYONE\PEC\MEMOS\98\LION.303 6 • ~ I-J O Lj- ~ 00 ~ ~ O ~ ~ o 0 p i , ZONE 'A' , ZONE 'B' ZONE 'C' _ _ _ _ - _ _ , _ RECOI"IMENDAtION FCaR RE IL FL4QR TO FLOOR NE(GHT: _ • s" t,r. wr. cavcRErE •T ON METAI, L,A'tN `Q 10" 5.477 INSl1l.ATION _ cv - NOT t GOLp WATER . - suFII-LY REtuRN r-oR FORGEp AIR 8Y6TEM ` 10° r-QRGED AIR DUGt . PLUMBIwC, WASTE PIPE FIRrz PROTEGTI0N 9PRINKLER pE5D LINE 8" REGE56ED INCANDESCENT L tCsN7lNCrt ~ 3" STONE PAVERS ~ A fN OUR EXF'ERiET1GE, A 12'-0" GE11NCa NEIGHT 15 bTRONC~LY PREFERRED B 7ppAY'9 f2ETAI4 TEN,4NT5. A Z'-6" MBLY AS SNd 7Yp. RE'~AI_L~ FLOOR/GEILfNCx ASSr MEETB MlN(MIJM GOpE REQUIREMENT OF A ONE NrJUR SEPaRA1'IpN, TH19 pIAGRAf'1 REPRF-9ENT5 5UFFIGIE1dT SPAGr: F4R CDORDIN.4TION OF FIRE PROTEGtIpN, MP!GWANIGAL, ELEGTRIGAL, ANp STRIJCTuRAL 5YS7EM5. IDEHALLY, TWE CON'fRACTO WOULD REQUIRE 1'-3" BELOW STrzEL FOR COORDINATION OF BLIILDING 5Y9TE1"'15. . . , • . . . , r , , . 0 0 0 0 o U o U o O o 117d I . Y~ COTTLE RET'AtL BUILDING SEGTION C~} T GRAY13EAL bAYb rrWCcz xo.: YAW ARCTiImEC'CS ~~Z4~-~I8 ?n I1 " = 11_011 ~ AGD t b ~tu usr urren rn uoi1 r~rrra~-2M n~m)u~a9~o SiS ' d 2,69 ' ON 00 1dIA3Q SlNOS32i IIti/1 WdOZ : S 866T ' bZ ' H3J REGOi`1P'IENDATION FOR 1"iID-LEYEL GONlaO FLOOR TC? FLOOR HEICsHT: - ' S" LT. WT. GONCRETE pN ME7AL LA7P 0 0 cr 10° E3AtT INSULATION Nor warER suPPLY 4 RETLlRN POR NYDRONIG BA5E60ARD HEAT PLLIMBING WA9Trz plpE r FIRE PROTEGTION 9pRINKLER FEED LINE ~ 8" REGES9ED INCANDEr-CENt L (CsNTiNG Q rY . RoDM , NYDRONIC BASE B0.4RD NEAT $Y$TEM NOTE: (N pl,lF2 EXpERIENCE, A 9'-0" GEIING HEICxHT 15 TNrz DrESIIRED MINIMUM PO CONC70MlNIUMS IN TN15 MARKET. A-W r-LOOR/CEILING ,455EMIBLY A5 SN MEETS MINIMUM GODE REQUIREMENT OF A ONrz NOLlR StPARATION. TNIS pIAGR,4M, NOWEVER, MAY REQUIRr: REROIJTING, RE5IZIN6, AND , „ . RECOORpINATION OF 5Y9TEM5 DURI • GONS7RlJCT[ON. A MORE 6LIFFIGIENT 455r:M6L7 r-pR tWl3 tJSE Wdl1Lp 6E A 2'-6° INTERSTITIAL SPAGE, 7NEREFORE ALL,OWING MORE SPACE BELOW STEEL 5EAP1S. IDEaLLY, THE CONTRACTOR, WOULD REQUIRr: 9" Br:LOW S1'Erz1. FOR COORDfNATION c7F 5l11LDiNG 5YSTE1`45. COTTLE Mla-GV57 GONDO BUILDING SEGrlpN GRAYHEAL YA1Y un: -qa F$~, x0.: AACHITECTS 2-24 Sk- LTp ecua: oiunr Xr cia ur ur~ M, m iuu Irro)M-um Amwm ° AGO SiE ' d L69 ' ON 00 1d_lA3Q SlHOS38 _lItiA Wd6T: S B66ti ' bZ ' H3.A REGOMMEND,4TION FOR uPPER-LEvEL coNDa FLO6R ?'O FLOOR HE IGHT: _ . .s . 5" LT. wr. GONGRETE ON METAL LATN 9 ~ im" BATT INSLILATION ~ ~ NOT t COLD UlATER • SLIPPLY i RETLIRN FaR ' FORGED AIR 8'1"5'fEM 10" r-ORGEL7 AIR DUGT pLuMBiNG lUAStE PIPE r-IRr PROtr=G'C(ON - SPRINKLER r-EED L.INrz ~ -8" REGESSNp INGANpESGENt LIGNTI1VCs ~ tYP. RaoM , iP IN pUR EXPERIENCE, A 9'-0" GEIING HEICaNT IS TWE DESIRrzP MINIMUM PO CONDOMINlUMS IN 7HiS MARICET, A 2'-6" FLOOR/Gt:ILING ASSEMBLY A$ 5HOUN M$ETS MINIMUI`1 GODE RrzQLlIREMENTS OF A ONE HOL{R 9EPARATION. TH19 D1,4CsRAM REPRESENTS SlJFF1GIENT 9pAGE FOR GOORDINA7ION OF FlRE PR01'EGl') MECHANICAL, ELEGTRIGAL, ,4ND ' ' ' ' S'tRUG1'1JRAL 978TEM8. (DEALLY, THE CON7RAGTOR lUOULD REQU1RE 1',V BELOW STEE6L POR GOORDINATIQN OP: 6LIILDING 5Y5TEM5. COTTLE GRAYHEAL HI6H~G05T GONDO BUILDING SEGTI ~ Y'AW oetr. t.oXccr ,ro.: A,RCHITECTS 2-24-qlD LTD ew.c: ua?mr ax: SK2 - 51o rerf utxuN ow, to eiou r(m"r Kmmpa-ma 1/2 I'-O" AGD S/b ' d L69 ' ON 00 1d7A3Q 51NOS3N 1ItlA WdOZ : S 866T ' bZ ' 96-1 ' MEMORANDUM DRAFT TO: Lionshead Redevelopment Master Plan Team FROM: Mike Mollica, Project Manager DATE: February 23, 1998 RE: Stage 4 Schedule Listed below in outline form is a proposed schedule for Stage 4. Please note that Stage 4 takes on two separate tracts. One tract is for the Design Guidelines and the second tract is for the drafting of the Master Plan. Also note that both tracts come together in the beginning of July for a final Council worksession and vote on July 7th. Stage 4 - Design Guidelines March 20th - Hire subconsultant Saturday, April 18th or Saturday, April 25th - Design Charette with DRB, PEC, Town Council, local designers. May 18th - Joint worksession with PEC and DRB. May 19th - Worksession with Town Council June 22nd - Final PEC recommendation on Stage 4 Design Guidelines. July 7th - Council worksession and Council evening meeting. Final vote on Stage 4 Design Guidelines. Stage 4- Final Master Plan May 1 lth - Worksession with PEC (draft of plan prouided to PEC a minimum of 1 week in advance). May 12th - Worksession with Council (draft of plan provided to Council a minimum of 1 week in advance). June 22nd - Final PEC recommendation on Master Plan. July 7th - Council worksession and evening meeting. Final vote on Stage 4 of the Master Plan. Stage 5- Adopt required Code modifications This stage will follow the standard PEC/Council submittal process. f:\everyone\mike\memos\ffi4sched.223 1 s Y LIONSHEAD HEIGHT & MASS PUBLIC MEETINGS SUMMARY Presidents' Weekend 1998 Sundav. Februarv 15 Members of 'the public present: 2(representing Lifthouse) Opinions, comments and concerns: • Concerned about loss of private views; TOV should consider condemnation of a portion of the VA core site to preserve views and address pedestrian congestion. • Concerned about congestion problems in ski yard and pedestrian areas, especially if the size of the pedestrian walkways are to be reduced. • • Concerned about accuracy of ski association study that shows 40 percent of those visiting ski areas to be non-skiers during winter and that shopping is the number 2 activity in resort destinations. • Widen skier pedestrian bridge and make part of it pedestrian only. MondaY. Februar,y 16 Members of the public present: 15 Opinions, comments and concerns: • Are you really seeking public input? It really doesn't sound like it. • This plan is just "smoke and mirrors" so VA can get its project built. • Which of the four height concepts did the Vail Town Council favor? • It upsets me to hear about a TRC in Lionshead near the Landmark (too much noise, would devalue our property). • I eat in Vail Village, then like to go back to my "quiet" condo in Lionshead. • What is the noise factor for all these plans? • I send my kids to the General Store and it is safe for now. We don't want any more bars in Lionshead. I want this to be a family place. • There has been no place for my under-l8-year-old daughters to go; nothing to do at night. • We bought in Lionshead because it was quiet; we do our shopping in Vail Village. - • Is there some other use for redevelopment of VA's core site other than a massive hotel? • I like the idea of low buildings; we don't want to recreate a New York City here. • We bought our place because we like our view; this project stands to negatively impact our view. • Which side of the building would you measure the height from? There ought to be a fixed height. Pm afraid VA could "buy" (through the height bonus public benefit process) a 25-story building. • What's the by-right height? Are there guidelines you need to meet just to go to the basic height? Go back to the public domain enhancements to drive building height on a site- by-site basis. • I agree with the pedestrian and retail concepts 100 percent; I'm just concerned about height. • I'm concerned about a large, tall hotel blocking views and creating noise. How many more live beds are needed in Lionshead? There are already more live beds in Lionshead than in the Village. I have friends who can still rent condos at the last minute in Lionshead. What is the need for live beds? • I'm concerned about dark corridors caused by tall buildings. • You're opening up a can of worms when you say `this building should be this high, and this building should be something else.' . . • Open up the Concert Hall Plaza area; use that space as a skier drop-off. • Concert Hall Plaza could benefit as a redevelopment area; would make a nice movie theatre or entertainment complex. • Is VA talking about redevelopment of the tennis courts? • There is great difficulty in redeveloping anything in Lionshead due to condo association declarations. • For the most part, the plan is good; lots of hard work on behalf of the project team really shows. ~ . , ID: JAN 09'01 4.02 No.001 P.02 1998 Town Counci! lntervfews AIPP Questions What vaiue do yau feel public art brings to the community? . How Can we more effeCtively educate the community regarding the merits of Art in Public Places? Who should be responsible for funding pubiic art? Do you have any past experience with other public art boards? What skills / resources do you bring to ihis board? - Fundraising experience. - Ability with public relations. - Knawledge of the current art market. - Cantacts within the art community (loan artwork for the Tamporary Art Program.) ~ Understanding of how ather municipal art pragrams are structured (Percent for Art Programs.) - Patience and enthusiasm for the process. - Time and energy. Are you prepared ta make the necessary time commitment to this board? TRISH KIESEWETTER Friday, February 20, 1998 Lorelei Donaldson Town Clerk Town of Vail 75 S. Frontage Road Vail, CO 81657 Dear Ms. Donaldson; I writing to you to formally express my interest in continuing to serve on the Art in Public Places for another term. I have been a member of the board since April of 1996. I run my own freelance marketing, advertising and freelance writing busi- ness and the majority of my clients and work is done in the Town of Vail. The main focus of my work has always been in promoting the arts in Vail and for that reason I have found serving on the Art in Public Places board very rewarding. I have been involved in the Siebert Plaza project since its inception and want to be able to help in seeing this project through to completion. I have enclosed a resume as part of my formal application for the posi- tion. Should you need any further information, please do hesitate to call me at either number listed on the resume. Thank you for your help with my application and I look forward to the interview with the Town Council on Tuesday, March 3, 1998. Sincerely, ~ . t':. Trish KiesewEtter BOX 1996 • VAIL, COLORADO 81658 9 PHONE/FAX (970) 845-8619 Trish Kiesewetter Home (970) 845-5075 Box 1996 Office (970) 845-8619 Vail, Colorado 81658 EDUCATION: 5/78 University of Virginia, Charlottesville, Virginia M.A. English 5/73 Trinity College, Hartford, Connecticut B.A. English 6/69 The Ivladeira School, Greenway, Virginia ' Graduated EMPLOYMENT: 1/904/96 V3ii Trail Newspaner, Vail, Colorado Editor arts, entertainment and lifestyle section. Completely redesigned, renamed and launched new pull-out section. 9/8742/89 Tattered Cover Bookstore, Denver, Colorado Bookseller in the business section. Wrote a book on entertaining titled I Can't Do It-Cal1 the Caterer. 10/83-4187 Take Me Home, Denver, Colorado Established and managed own catering, box lunch and retail take-out business. 11/81-9/83 People Magazine, Denver, Colorado Correspondent for the Denver bureau covering stories in a five-state area. Freelance writer/reporter doing articles for USA Toda_y, Geo, Life, Science 82, Rocky Mountain Magazine and Colorado Homes and Lifestyies. 7/79-8/81 Science 81 Magazine, Washington, D.C. Picture editor. Responsible for the photographs in both the magazine and all promotional material. Commissioned all photography. Founded and headed the photography department, including drawing up the annual photography budget and approving all related invoices. 10/78-6/79 Freelance writer/editor for the Washington Star and a public relations firm which writes newsletters, promotional material and articles for trade associations. 6/78-9/78 Promotion Department, Time/Life Books, Alexandria, Virginia Freelance editor for special project, catalogue caption writer, assistant in making TV commercial. 2/76-7/76 Time/Life Films, New York, New York Writer/reporter for water bird book in Wild, Wild World of Animals series. 11/75-1/76 Home Box Office, Time Inc., New York, New York Associate editor and layout assistant for promotional program guide. 5/74-10/75 Time/Life Books, New York, New York Assistant picture editor and caption writer for American Wilderness book series, conceived and assisted in inirial layout for brochure of series on sports, researcher for promotional flier, researcher for book series Boating and The American Wilderness. References, writing samples and portfolio provided on request. D~~-~~ ~ 6e- ag?el . ~ P~-c.c~ / • v?~~GU~ ~ ~i~ wa~~ ~ , , . . ~ ~~?~.~~~~c.e~ ~~c ~ y ~ ~ p1 Y7~ 13 S~C~ peel/langenwalter architects, I.I.c. david mark peel, a.i.a. kathy tangenwalter, a.i.a. 2588 arosa drive p.o. box 1202 vail, co 81658 970-476-4506 970-476-4572fax February 25, 1998 Vail Town Council Members Town of Vail 75 South Frontage Road West Vail, Colorado 81657 Dear Council Members; My first appointed term to the Art in Public Places Board is coming to a close. During my three year term, the AIPP program has come from neglect and abandonment to resurgence. The relocation of the program from the Community Development Department to Public Works has been positive and appropriate. With the assistance of our AIPP coordinator, Nancy Sweeney, the board is now in a position to realize our goals. I would appreciate the opportunity to continue on the AIPP board, to work toward the completion of the Seibert Circle project, and to help instigate new programs and projects. Thank you for your consideration. Yours truly, - Kathy L ngenwalter ! rl.~ 5 G . ~7~N T~. ~D ~X~-tc.. ~ a!(sS'~ 1~ 64A,~ COwMu r ~ 94Y1,1- W424 T`i t-4 CA "(Z> ~R-~,SS r~t~ ~ ~Tf~~ f" t l 4~Z,o L-1 k r4 c't r4- ?"u ~6v4A-s -f h -i',+c- GovW?~ 1,ji-r-i-1 `C~t*_ ~t-4 r1E.^t r c~ 1-6,6N~-, ~t. C.-~_ ~s'"--•~" -'E-ccn~ ~ qns~'-~ ~ HiAffl~ M Car4 nnltA-~. C)r..t Pts 90~~wt iry rs 0 -T~?L Frs~ Cert ~u o~,~ c~ r~- ~c- s~t~n~-~2 aI,.~ Tt4f_- +4-1~0 6MkR4'-') . -brk.~;.e''~-`.l ~ JAN 09'01 4:02 No.001 P.02 w, L4~~A-A CYIe 3 3c* a.-~ ` rvue AAS GL e4e'-) L~.t.2 a'-A iA- j ~ l~ ~v~u.~' ~ ~.c.~-t;cr c~ 1998 Town Council intervfews ~ AIPP Questlons What value do you feel pubiic art brings to ihe community? t4~ Ua. c-A-'P~Y h; ~y aA'-l CZ-1i CIN,.,a c~,.~" . How can we more effectively educate the community regarding the me rts of Art in Public Places? `(-L_, C,IZ C~~u--u3c~ ~t~..~ C•-,r~,...t~.~;,,,._ e~l~+~.~v~ . ~1 Who should be responsible for funding pubiic art? itES4,ni,- o_ D~8 you have any ast experience with other Public art boards? 1~r2A~-~ i n~.ti S~-J u c..y c.,. ~-I~ ~'~:.1 ~Lc ~~(L~c.~, l~,ti?c-~. U What sk;ils / resources do you bring io this board? - Fundraising experience. - Ability with public relations. - Knowfedge of the current art market. f Cvntacts within the art community (loan artwork for the 7emporary Art rogram.) !~:7~ks -4 cJv~- ~ ~..•u~,-Wl-k.<,~w~&,,, a Re~~dJ ~r).A.M.~. Understanding of how other municipal art programs are structured , ercent for Art Programs.) ~T G4A.V---j Patience and enthusiasm for the process. t/ Time and energy. Are you prepared ta maice the necessary time commitment to this board? ' ~ LL5,_ U , ~ J7 K, crc,Ac 10064'j ~ 03/02/1998 15:56 8169316963 KOSLOFF AND PARTNERS PAGE 02 ..r; : ' • • ~ ALaN w. xosLOFF : 416 Forest Road Vail, CO 81657 970-475- 1340 . March 2, 1998 . Ms. Lorelei Donaldson Town Clerk 755 Frontage Road Vail, CO 81657 . Taear Ms. Dottaldson, The foilowing is in respvnse to tfie 199$ Town Council intezview! questions regarding tlie f1rt in Public Places board. VVhat value do you feel public art brings to the community? : BuiIdings and people are the heart af $ny community. public art is the soui. Public art heips develap a sense of pride and accotnplishment. The quaii#y of . life is enhanced by wetl chosen and. appropriate art. most 'major citids i.n the U.Sa maintain a public act program. T'hey recognize that the city or village is where people gather to enjoy Iife and publie art is an impottant element in providing an attractive and rnixturing environment. How can we more effeetzvely educate the commumty regarding tlie merits of Art in Public Piaces7 We can more effectively educate the cammunity regardin'g the merits of public Art by opening the process as much as possible $nd inclurling tepresmatives f'rom all parts af the community. public art shou.ld be "elebited" by the people or their representadve and not r.lxosen by the elite. 'VVhen people are more. famitiar with the process they become much mare comfort61s and a,menable to Public Art and recogruze the value. Who should be respansible for funding public art?. The public should take the lead in funiiing public att, but fi~e private sector neerfs ta play a role by heIping ta create a gositive environdient and praviding financiaJ support. The grivate sector benefits when ihe comrntutity is cnhanced with pubiic art and its contcibution is.esselttial_ ; ; .i 03/02I1998 15:56 8169316963 KDSLOFF AND PARTNERS PAGE 03 . . . . . -::`r.: ~.7 . . . . . . ^L`' . .'i' . . _ . . . I'. . . Do you have any past experience with other pubtic art boards? ~ Five years ago i was appointed by the. Mayor to serve oin the Mnnicipal Axc Commission of Kansxs City, Missourz. During this pea-iod I chaired and served on committees to advance publ1c art and to maintain exccllerice in architecture and photography. What skills/resources do you brirzg to this board? I have extensive fund raisjng experience wtth such divers6 argani:zations as the Kansas City Pllitharmonic, the Jewish Community Faundatiott and the Kansas City Camerata. My knowleclge of t,he curtent art market is quite broad since i have $ priv$te art collectibn ancj keGp up with the curTnt maTke# through art publica#ions and exhibitions throughqut the country, I have comaczs within the arteornmunity thraugh my inter'est as a coltector. The Municipal Art Commission of Kansas City.has a I'/o Art progtam artd I have worked with the progam for five years and am f~miliar with haw otrter cities work within that grocess. I do h,ave patience, enthusiasm, time and energy for th}s ptocess. I have visited and lived in Vai1 for more than 20 years and understanti the community well.. I woutd like very much to be part ofenhancing the comm: unity through public art. A.ce you prepared to make the necessary time commitment to this board? . We naw live much of the year in Vail_ t do have an exteragive travel schedule, however, I do not believe that would irrterfexe with the respdr?sibilities vf the Art in Public Places board, you for your cor~sideration, ; kan W osioff I : . g ~ COMMON GROUND A PLAN FOR VAIL'S COMMUNITY NEEDS Outcome: To identily a permanent funding source for housing, as well as a siting package for Vail's housing, parks, public facilities and open space needs by June 30,1998. Givens 1) Final decision will be made by TOV Council for the community good. 2) Funding sources for affordable housing will be identified and implemented. 3) TOV will fill the role of facilitator in providing housing; the Town of Vail will consider using the following strategies as well as others to fulfill that role: --land provision/site acquisition, including existing units --facilitator/incentivizing --site-specific subsidies --regulator/approval of projects --condemnation for public use --service provider (police, fire and transit, etc.) 4) Process is open to all who want to participate; however, Council must be most responsible to Vail interests, residents, employers, employees. 5) Because failure to have a time line has, in the past, resulted in failure to resolve the housing problem, the Town of Vail has set June 30 to have these funding and siting decisions made so a project(s) can be underway in 1998. 6) All housing projects that are already underway will proceed. 7) All ideas for public uses are welcome. 8) All sites, both publicly and privately held, and funding sources will be considered in the context of the overall community good. All participants will be encouraged to look at community-wide impacts rather than site-specific impacts. 9) !n making these decisions, compromise will be necessary. 10) Some currently undeveloped public lands will be developed for community purposes. 11) Land within designated open space will not be used for (check charter language). 12) The process will focus on projects that affect land use and will not address related issues such as maintenance or operations. 13) So that the Town of Vail can be held accountable for responsibiy addressing the critical affordable housing shortage, it has set a target of having 62 percent of our community's employees living within the Town of Vail; the Town of Vail will facilitate the construction or acquisition of affordable housing units until that target is reached or the crisis is averted in other ways. 3 ' J COMMON GROUND A PLAN FOR VAIL'S COMMUNITY NEEDS STEP 1 2/8 to 3/23 TOV Determines... ~ General estimate of funding needed to accomplish housing goal (see given) • Inventory of potentiaf sites . • Test process steps an focus group • Draft list of criteria to evaluate funding options • Draft list of criteria to evaluate siting alternatives (2/8 to 3/1) STEP 2 3/1 to 4/16 Community... • Identifies community uses and needs • Generates ideas for funding sources • Responds ta criteria for funding and siting "Anything that should be a criterion? Anything missing?" Methods --Mailed survey 311 to 413 --Interviews --Combined open house/forum/workshops 4110 to 4116 CHECK POINT- REVIEW PUBLIC INPUT AND RE-EXAMINE PROCESS AND DETERMINE IF PUBLIC FACiLIT1ES SITING PROCESS NEEDS EXTENSION COMMUNICATE ALL INFORMATION TO DATE 8TEP 3 4/20 to 5/22 TOV.:. • Applies criteria and identifies funding options • Applies criteria for siting and develops multiple comprehensive packages of maps addressing each of the four categories of need STEP 4 /1 0 6! Community Responds to... • Funding options • Siting Alternatives "What do you like about the options/alternatives and why?" Methods --Public Workshops i 9 TEP 5 /10 CHECK POINT- REVIEW PUBLIC INPUT AND RE-EXAMINE PROCESS (This is an interna/ TOV assessment of the process, to date, fo confirm that the process schedule can be met.) COMMUNICATE ALL INF RMATION TO DATE TEP 6 6/8 to 12 , . TOV Develops... . , " • Final funding package • Final siting plan TEP 7 6/12 to 6/25 Community opportunity for... • Final response "Here's what you said. Here's what we did. Here's what we're about to do." Methods --Newspaper ad --Informationa/ mailing STEP 8 6(3Q Vail Town Council... • Acts on funding and siting packages forwarded for action NEXT STEPS: IMPLEMENTATION PRODUCTS A MEMORANDUM TO: Vaii Town Council. FROM: George Ruther, Senior Planner DATE: Ma.rch 3, 1998 . _ SUBJECT: Discussion of the proposed major amendment to Special Development District #4, - and the discussion of the development review process for this request. 1. DESCRIPTION OF THE REQUEST The applicant, Jerry Wurhman, is requesting a major amendment to Special Development District #4 (Cascade Village) pursuant to Title 12, Chapter 9A of the Town of Vail Zoning Regulations. The major amendment is intended to modify a 1995 major amendment approval for the Westhaven Condominiums, located at 1325 Westhaven Drive (the "Ruins"). The applicant is proposing to amend the 1995 Westhaven Condominium approval to a11ow for the operation of a fractional fee club. The new fractional fee club is proposed to include: • eleven, two-bedroom, fractional fee club units with eleven lock-offs, • four, one-bedroom accommodation units, and • twenty, one-bedroom employee housing units. The previous approval allowed for the construction of fourteen free-market condominiums and seventeen employee housing units. At this time, only minor alterations are anticpated to the exterior of building and a11 other development standards a.re proposed to remain substantially unchanged. The applicant is currently scheduled to appear before the Planning and Environmental Commission on Monday, March 9, 1998, for a worksession discussion of the proposal. A final review will occur at a later date. U. BACKCTROUND • On April 19, 1995, the Vail Town Council approved a major amendment to Special Development District #4. The amended development standards approved by the Town Council are compared to the oriainal SDD approval and are listed below: 1 ~ DEVELOPMENT STATI TICS Lot Area: 0.85 acres or 37,026 sq. ft. Zoning: SDD #4 (Cascade Village) Development Standard Oriainal SDD Approvai 1995 Approvai Height: 55' 55' GRFA: ' Free Market: 22,500 sq. ft. 25,644 sq.ft. EHiJs: 6.400 sg. ft. 8?96 sa.ft. Tatal: 28,900 sq. ft. (78%) 33,940 sq.ft. (92%) Common Area: 10,115 sq. ft. (35%) 3,417 sq. ft. (11.8%) Density: Free Market: 20 dwelling units 14 dwelling units EHLTs: 10 EHUs 17 E s 30 total units 31 total units Setbacks: 20' 24' Site Coverage: 35% (12,959 sq. ft.) 36.7% (13.598 sq. ft.) Landscaping: 50% (18,513 sq. ft.) 47.9% (17,767 sq. ft.) Retaining Wa11s: 376' none proposed Parking: 75% shall be enclosed 82% shall be enclosed 44 total spaces 45 total spaces Employee Housing: minimum of 8 units; 17 EHLTs, similaz to minimum of 648 sq. ft. each; Type III restrictions should not count towa.rds density or GRFA An analysis comparing the 1998 proposal to the original and 1995 approvals will be provided at a later date. III. DEVELOPMENT REVIEW PROCESS Pursuant to Section 12-9A-2 of the Municipal Code, in part, a major amendment is defined as, "Any proposal to change uses; increase gross residential floor area; change the number of dwelling or accommodation units; modify, enlarge or expand any approved special development district." Since the applicant proposes to change the uses and change the number of dwelling and accommodation units, staff has identified the applicant's request as a major amendment. 2 ~ , In accordance with Section 12-9A-4 A-C of the Municipal Code, an approved development plan sha11 be required prior to construction. The approved development plan shall establish requirements regulating development, uses and other activities in the special development district. Additionally, the applicant shall be required to hold a pre-application meeting with the Community Development Department prior to submitting a formal application. The purpose of the meeting shall be to discuss the goals of the proposed special development district, the Town's Master Plan and the review - procedure which will be followed for evaluating the application. Further, the Planning and Environmental Cominission sha11 conduct the initial review of the amendment to the special development district. The review shall take lace at a re the Planning and Environmental Commission's review, he Community Development Departmet ~ hall ng forward a report to the Town Council stating the PEC's findings and recommendations on the amendment request. The Town Council shall then review the application based upon the information submitted. An approval of the application by the Town Council shall require two readings of an ordinance. III. STAFF RECOMMENDATION The sta.ff is recommending that the above-described procedure be followed in reviewing the applicant's major amendment to Special Development District #4. The staffwould further recommend that the Town Council provide any direction they may have, at this time, regarding this amendment to the applicant, staff and Planning and Environmental Commission. Additional opportunities for Council input will be provided during regularly scheduled PEC Reports to Council or joint worksessions, if deemed necessary by the Council. Staff anticipates that the regularly scheduled PEC Reports would include staff memoranda, full- size plan sheets and additional time on the agenda, if requested. ~ ~ ~ VAIL TOWN COUNCIL MEETING--MINUTES TUESDAY, FEBRUARY 3, 1998 7:30 P.M. A regular meeting of the Vail Town Council was held on Tuesday, February 3, 1998, at 7:30 P.M. in the Council Chambers of the Vail Municipal Building. The meeting was called to order at approximately 7:30 P.M. MEMBERS PRESENT: Rob Ford, Mayor Bob Armour Sybill Navas Kevin Foley Mike Arnett MEMBERS ABSENT: Ludwig Kurz Michael Jewett TOWN OFFICIALS PRESENT: Bob McLaurin, Town Manager Tom Moorhead, Town Attorney Pam Brandmeyer, Assistant Town Manager The first item on the agenda was citizen participation. Sue Dugan, a West Vaif resident and native of Australia, stated she had just returned from a visit to Australia and would like to make a presentation to Council at a future work session date to share materials and photographs she collected regarding the function and design of roundabouts in her home country The second item on the agenda was the consent agenda to approve the minutes from the meetings of January 6 and 20, 1998. Counciimember Bob Armour made a motion to approve the minutes of January 6 and 20, 1998 and the motion was seconded by Councilmember Michael Arnett. A vote was taken, there was unanimous approval, 5-0. The third item on the agenda was a presentation to the Mayor and Council by Mt. Builer students, Amy Jakolew and Edwina Sigmund. The students thanked the Town of Vail for their hospitality and presented Mayor Rob Ford with a letter from the manager of the Deiatite Shire in Australia. The fourth item on the agenda was Proclamation No. 1, Series of 1998, a Proclamation honoring Vail residents Chad Fleischer, Sacha Gros, Sarah Schleper, and Barrett Christy as 1998 U. S. Winter Olympians. Pam Brandmeyer read the proclamation. Councilmember Bob Armour made a motion to approve Proclamation No. 1, Series of 1998, the motion was seconded by Sybill Navas. A vote was taken, there was unanimous approval, 5-0. The fifth item on the agenda was a presentation by Mike Gallagher, Chairman of the Eagle County Regional Transportation Authority (ECRTA), representing the Eagle County Regional Transportation Authority; Jim Shrum, ECRTA Director; and Vicki Maddox, Financial Adviser, 1 Senior Vice President of George K. Baum & Company. Mike Gallagher, chairman of the Eagle County Regional Transportaticn Authority, made a presentation and requested the Council to continue its five-year funding commitment to ECRTA. The authority has asked the town for an $86,000 contribution in 1998. the same as the 1997 request. Requests also have been asked this year of the other original funding partners: Town of Avon, $62,500; Beaver Creek Resort Company, $225,971; and Eagle County, $75,324. Gallagher said it was the board's hope that Vail would continue its ccntribution to set the example for the other entities. Several entities have questioned the need to continue the five- year funding commitment, launched in 1996, because of heaJthier than expected sales tax collections (which funds the bulk of the system). In response, the authority's director, Jim Shrum, outlined a list of upcoming capital expenses that he said documents the need for continuation of the piedged funding, which totais $450,000 for 1998. Those projects include land acquisition and construction of a$10 miilion maintenance facility; consiruction of 50 bus shelters; and repiacement of haif the system's fleet. Shrum said the authority crefers to pay cash for the capital improvements as opposed to financing options, which officials said couid end up doubfing the cost of the pro}ects. Rob Ford asked that the Council revisit the funding on a yearly basis. Bob McLaurin stated this is a yearly contribution over 5 years and is r:Ct a 5-year commitment. Councilmembers Kevin Foley and 8ob Armour expressed support for'lail's continued funding. Councilmember Sybili Navas asked for additional information and war;.s to see more specific cost figures before making a decision. Councilmember Kevin Foley requested and the Council agreed to posmone its vote on the funding issue untii ali seven Councii members are present. Mayor Rob Ford thanked Jim, Mike and Vicki for their presentation ancwill wait until the all seven members of Council are present before voting on this item. The sixth item on the agenda was an update by the Vail Tomorrow Buiiding Community Team represented by Stan Cope. Stan Cope, representing a sub-team of the Vaii Tomorrow Building Community team, provided an update regarding the group's interest in pursuing a commurity center for Vail. Construction of a community center is one of 40 Vail Tomorrow actions endorsed by the community. Cope said the sub-team is being formed to identify potentiai partners for such a facility and to involve the community in generating a list of "wants and needs." He said the group would be returning to the Council soon to propose a grassroots, consensus-building community coilaboration process that would move the issue forward with the goai ct enhancing Vaii as a community. He said the Councii also would be asked to help share the Cost of the process. Another potentiai partner, he said, is the Vail Recreation District (VRD). Kirk Hansen, a VRD board member, acknowledged VRD's interest and,,viilingness to participate in a community dialogue. 2 ~ f ~r Councilman Bob Armour, warned that the town, whether it be requests for an aquatic center, bowling alley, etc., wiil be unable to fulfiii everyone's wish lists and there are funding constraints. Councilmember Sybill Navas, who's been attending the sub-team meetings, said it will be important for everyone to agree on how decisions will be made up front to avoid problems later on. She also stated that the idea of a community center came from a few teams wish list, not just the Vail Tomorrow Building Community team. Mayor Rob Ford thanked the group for taking the project on and asked that the Council be apprised of the group's activities so as not to duplicate efforts. The seventh item on the agenda was a presentation by the Vail Tomorrow Affordable Housing Team represented by Kent Rose. Kent Rose, a member of the Vail Tomorrow Affordable Housing Team, thanked the Council for its commitment to work with the community to identify a permanent funding source for housing by May 1. Kent Rose said the team wished to lend support for consideration of reallocating up to 50 percent of the real estate transfer tax (RETT) revenues. He also asked if the Council had any tasks it wanted to hand off to the team, now that the group has identified and forwarded, through Vail Tomorrow, its recommendations on potential housing sites as well as other methods to increase Vail's housing inventory. He also stated the Vail Tomorrow Affordable Housing Team would like Vail Associates to continue to support and provide for their empioyee needs. Mayor Rob Ford said the Council is committed to looking at all potential funding sources above and beyond the RETT tax. He stated the town will initiate a process to present to the public to address RETT fax, similar to the West Vaii interchange process and May 1, 1998 is the deadline date to have a process in place. David Corbin, representing Vail Associates (VA), speaking on behalf of Jack Lewis, who heads . up VA's housing program, described VA's role in development of the RiverEdge project in Avon and offered the company's full support and participation in constructing similar developments in Vail. He also stated he would like to see other private entities participate in this effort. Stan Cope, a business manager, aiso spoke to Council and asked that private sector participation be extended to some of the smaller businesses, as well. Chuck Ogilby, a member of the housing team, complimented the Council for its housing commitment and asked that Council use its political will to overcome the wave of NIMBYism that will likely occur as a result of the effort. Chuck Ogilby also asked the Council to consider an incentive program that would make it worth his while to continue making his unrestricted employee housing units available to locai employees in the future. He also encouraged the Council to consider inclusionary zoning and to buy existing units to help accelerate the supply of deed-restricted units. Mayor Rob Ford stated that the town wants to enter into a discussion with Timber Ridge owners to maintain and preserve it as locals housing. The Council is also looking at buildings with 3 ~ caretaker apartments to be used as local housing and encourages additional caretaker units to be used as locals housing. Rob LeVine, a member of the Lionshead Merchants Association, said he, too, appreciated Council's commitment. He asked Council to be "leaders" in the process, not "listeners", and supported spending RETT funds for this process. Anne Esson, a member of the Vail Tomorrow Affordable Housing Team and East Vail resident, noted that only a small portion of RETT is actually used for open space acquisition. Kaye Ferry, a member of the Vail Village Merchants Association, said the Vail Village Merchants Association January, 1998 meeting was about housing issues. She stated the most critical need is for seasonal housing within Vail's boundaries. The eighth item on the agenda was first reading of Ordinance No. 2, Series of 1998, an ordinance amending Section 1-5-11A Establishing the Time of the Town Council Regular Meeting Dates. Tom Moorhead, Town Attorney, stated the ordinance was drafted at the request of Council. Council wanted an ordinance amending the time of the regular meeting which is presently set at 7:30 p.m. The ordinance as drafted will allow each Councii to consider the appropriate starting time at its organizationai meeting foliowing the biennial Council elections, which can then be approved by resolution so the Municipal Code does not have to be recodified each time. Councilmember Bob Armour made a motion to approve Ordinance No. 2, Series of 1998 on first reading, and the motion was seconded by Councilmember Kevin Foley. A vote was taken, there was unanimous approval, 5-0. The ninth item on the agenda was seconding reading of Ordinance No. 1, Series of 1998, an ordinance amending Title 12, Zoning Regulations, Section 12-7c-5(a)(3), to Waive the Major Exterior Alterations Application Deadlines for 1998 for the Lionshead Redevelopment Master Plan Study Area. Dominic Mauriello, Town Planner, expiained the purpose of the ordinance was to change the deadline dates for major exterior alterations in Lionshead, CCII Zone District. The deadlines are currentiy scheduled for the fourth Monday in February and the fourth Monday in September. Dominic stated the Town is currently engaged in stage 3 of the five stage Lionshead Redevelopment Master Plan process. The plan is at a crucial stage where issues of buik and mass are being studied and recommendations are being formed. Staff believes it will be detrimental to the master planning process to have property owners submit redevelopment proposals in the Lionshead Study Area before issues of bulk and mass have been determined. Staff believes that the Town should allow the master planning process to proceed and at the same time allow potential applicants more flexibility with submittal deadlines in 1998. Tom Moorhead stated this was a temporary moratorium issue and shouid appiy to ail zone districts within the Lionshead study area. He also stated the time restrictions are of a reasonabie duration to June 1998. 4 ~ ~ . Mayor Rob Ford clarified that this ordinance was drafted due to Lionshead Master Pian and does not support a moratorium of the deadline date. Councilmember Mike Arnett stated that this request should apply to all zone areas not just Lionshead. Councilmember Sybill Navas agreed with Mayor Ford and doesn't like the moratorium aspect of the ordinance. Councilmember Sybiil Navas made a motion to approve Ordinance No. 1, Series of 1998, with a change deleting the submittai deadlines. The motion was seconded by Councilmember Kevin Foley. Further discussion ensued. A vote was taken. Councilmembers Mike Arnett and Bob Armour dissented. The motion did not pass. Councilmember Kevin Foley made a motion to table this item, Councilmember Bob Armour seconded the motion. Motion withdrawn. Mayor Rob Ford asked for another motion. Councilmember Mike Arnett made a motion to approve the second reading of Ordinance No. 1, Series of 1998 with the modification that the submittal deadlines for CCI and CCII zone districts be eliminated for the 1998 calendar year so that both zone districts would be treated equitably and fairly. This motion was seconded by Counciimember Kevin Foley. A vote was taken, there was unanimous approval, 5-0. The tenth item on the agenda was a Loading and Delivery update. Police Chief Greg Morrison updated the Council on loading and delivery during the Holidays. He stated there because of staffing shortages, it was difficult to man Checkpoint Charlie and the temporary road biock on Hanson Ranch Road effectively. The experimental barricade concept at Hanson Ranch Road was installed during the morning and afternoon peak periods during a 21-day period over the holidays to discourage use of the area for skier and employee drop-off, which had been clogging up loading and delivery operations. Chief Morrison said the effort was successful in defending the 10 parking spaces for delivery trucks, but stated the drop-off problems were disptaced to other neighborhoods. Morrison aiso described current obstacles in hiring additional personnel to staff the barricade. He said the department has been understaffed in the code enforcement division ail season long due to the lack of applicants. Councilman Michael Arnett suggested looking into an automated system that would control traffic on Hanson Ranch Road. Chief Morrison stated an automated system would solve some problems but create new ones such as the probiem of getting a code out to different people needing access, it would be labor intensive. Chief Morrison stated a reorganization of the code enforcement division, which includes a 5 proposal to add animal control to its services (now being contracted with Eagle County), will improve current staffing levels by converting seasonal positions to fuil-time positions. Jim Lamont, of the East Village Homeowners Association, requested the barricade experiment be continued, as well as increased enforcement in the other neighborhoods, to fulfili the town's commitment to help with traffic flow coordination at the Golden Peak ski base during its first year of operation. Diana Donovan, a long-time resident, said she opposed preferential treatment on pubiic streets and said she is opposed to the concept of gated neighborhoods in Vail. Chief Morrison made a recommendation to Council to keep Checkpoint Charlie manned 7 days a week, from 7 a.m. to 7 p.m. through April 12. Councii agreed ta continue increased staffing at Checkpoint Charlie (7 a.m. to 7 p.m.) at least through April 12 to improve coordination of loading and delivery in the Village. The eleventh item on the agenda was the Town Manager Report. Bob McLaurin had nothing to add to his report. Councilmember Kevin Foley suggested the town staff go to the next Vail Village Merchant Association meeting and inform them about the upcoming public and private construction projects that are planned for the Viilage during the spring and summer. As there was no further business, Councilmember Mike Arnett made a motion to adjourn, Councilmember Kevin Foley seconded the motion. A vote was taken, and the motion passed unanimousfy, 5-0. The meeting adjourned at approximately 10:00 p.m. Respectfully submitted, Robert E. Ford Mayor ATTEST: Lorelei Donaldson Town Clerk 6 a i VAIL TOWN COUNCIL MEETING MINUTES TUESDAY, FEBRUARY 17, 1998 7:30 P.M. A regular meeting of the Vail Town Council was held on Tuesday, February 17, 1998, at 7:30 P.M. in the Council Chambers of the Vaif Municipal Building. The meeting was called to order at approximately 7:30 P.M. MEMBERS PRESENT: Ludwig Kurz, Mayor Pro-Tem Bob Armour - ' Sybill Navas - Kevin Foley Mike Arnett Michael Jewett MEMBERS ABSENT: Rob Ford, Mayor TOWN OFFICIALS PRESENT: Bob McLaurin, Town Manager Tom Moorhead, Town Attorney Pam Brandmeyer, Assistant Town Manager The first item on the agenda was citizen participation. There was no citizen participation. The second item on the agenda was a discussion and First Reading of Ordinance No. 3, Series of 1998. A request for a major amendment to Special Development District #30 (Vail Athletic Club), to allow for a change in the number of dwelling units/accommodation units, modifications in common area square footage and GRFA, and an ordinance modification of the EHU timing requirements. Mike Mollica, Assistant Director of Community Development presented this item to Council. Mike stated there were five salient points to this ordinance which were in the Planning and Environmental Commission (PEC) memo given to Council. Staff had concerns about the expansion of the building envelope. Staff recommends approval of the changes to the ordinance except for the 62 square feet of GRFA. There is also an error in the ordinance on page 3, regarding the density. It should read 54 accommodation units not 55. Also, on page 4, item 8, the final numbers for the GRFA and common area are not available at this reading. Staff will have the accurate numbers prior to second reading. The plans call for the elimination of two accommodation units, the conversion of one two bedroom dwelling unit to a"presidential suite" accommodation unit, and the expansion of one dwelling unit. Councilmember Bob Armour asked if the 4th floor unit will be an accommodation unit instead of a dwelling unit. Mike Mollica stated that was correct. 1 e Stan Cope, representing the Vail Athletic Club, explained the 5th floor modification does not change the roof line, the change moves the wafl out and fills in under the eave line. Overall, the Vail Athletic Club would have a total of 54 hotel rooms, 3 dwelling units and 4 employee housing units. Jim Lamont, representing the East Village Homeowners Association, stated that SDD's are controversial and would like to see that SDD's have substantial compliance before going through PEC. - Councilmember Mike Arnett made a motion to uphold tfie PEC decision and made a . motion to approve Ordinance No.3, Series of 1998 on first reading with the changes on Page 3, Section 5, change the accommodation units numbers from 53 to 54 and to provide the GRFA numbers by second reading and the changes on Page 5, accommodation units numbers from 53 to 54. The motion was seconded by Councilmember Kevin Foley. A vote was taken, there was unanimous approval, 6-0. Councilmember Kevin Foley welcomed Boy Scout Troop #231 to the Town Council meeting. The third item on the agenda was second reading of Ordinance No. 2, Series of 1998 amending Section 1-5-11A Establishing the Time of the Town Council Regular Meeting Dates. Councilmember Bob Armour made a motion to approve Ordinance No. 2, Series of 1998 on second reading, the motion was seconded by Councilmember Sybill Navas. A vote was taken, there was unanimous approval, 6-4. During discussion, Councilmember Sybill Navas wondered if Councilmembers would consider a 6:30 p.m. start. Tom Moorhead will prepare a Resolution specifying the 7 p.m. start time (30 minutes earlier than the existing start time) effective March 17, 1998. The new start time will be determined during discussion of the resolution on March 3. The fourth item on the agenda was Resolution No. 4, Series of 1998, a Resolution Adopting the Intergovernmental Agreement Between and Among the Towns of Avon, Basalt, Eagle, Gypsum, Minturn, Red Cliff and Vail, Colorado (Municipal Corporations and Political Subdivisions of the State of Colorado), to Employ Joint and Cooperative Efforts With Eagle County to Obtain the Mutual General Goals of the Efficient, Well Ordered and Economic Provision of General Government Services and the Mitigation of the Disagreeable Impacts of Uncoordinated Growth. Bob McLaurin stated various municipalities within Eagle County met with Eagle County to address managed growth concerns throughout the county. The agreement encourages 2 s the "concentration of planned and needed growth and density in municipalities where such growth is more efficiently and cost-effectively served by centralized infrastructure and services and where its location will help preserve open spaces and agricultural land; and coordination of land use decisions between the county and municipalities within those areas identified by the municipalities and the county within which land use change will have a significant impact on either the county or a municipality." Also, the agreement requests a joint meeting with Eagle County officials to increase coordination of the managed growth issues. Councilmember Sybill Navas made a motion to approve Resolution No. 4, Series of 1998 . and was second.ed by Councilmember Mike Arnett. A vote was taken, there was unanimous approval, 6-0. The fifth item on the agenda was the Seibert Circle Arts in Public Places (AIPP) project approval. Nancy Sweeney, AIPP Coordinator made a presentation of the Seibert Circle art project. The Art in Public Places board would like Council approval of the design contingent upon Design Review Board (DRB) approval on Wednesday, February 18. The design, which has evolved over the past two years, features a small amphitheatre-like gathering space in the center of the circle with three vertical granite sculptures designed by renowned artist Jesus Morales. Also, the project includes a bronze statue of Pete Seibert designed by Susan Raymond. Nancy Sweeney said the design has been enthusiastically received by adjacent property owners who have asked that construction be contained to April through June of either this year or next year. Nancy explained there was a budget shortfall of $183,000. The shortfall has been caused by expansion of the proposed streetscape improvements to include private property (building front to building front), as well as an additional $68,500 for the Seibert bronze and $5,000 to relocate the fire hydrant, for a total of $73,500. The total streetscape improvement, which will include heated pavers, is estimated at $800,000. David Kenyon, with Design Workshop explained the project concept, start of the project, types of materials, and the changes that were made. The concept is the same, the changes that have been made is the addition of a bronze of Pete Seibert contemplating the mountain with plans and the statue is located in front of the Red Lion. Bob McLaurin explained the request for Council approval was out of the usual order of the approval process because of neighborhood requests. Pete Seibert, for whom the circle is named, expressed uncertainty regarding his support q for the design. Bob McLaurin stated the Town has tried to involve everyone in this project and to keep in mind that the town will never get a project everyone is completely happy with. He has 3 ~ spoken with Marty Head, a Vail resident, and she stated that this artist is well known and it will get people to come to Vail and that the price was good. Ron Riley, an adjacent business owner, encouraged the Council to move forward. Kaye Ferry, representing the Vail Village Merchant Association, asked that construction be delayed for a year due to other construction projects in the Village that are already on line. - Councilmembers reacted positively to the project's design. ' Councilmembers Michael Jewett and Mike Arnett stated they thought is was a wonderful project but both questioned using tax dollars for public art. . Councilmembers Sybill Navas, Michael Arnett and Bob Armour encouraged additional financial support from surrounding property owners to complete the project. Councilman Ludwig Kurz suggested moving forward with the project, noting that costs aren't likely to go down. Kevin Foley asked if this project was consistent with the Town of Vail Streetscape Master Plan. Todd Oppenheimer, Park Superintendent/Landscape Architect, stated it does comply with the Town of Vail Streetscape Master Plan. Councilmember Mike Arnett asked if there was a possibility to store the artwork if it could not be placed prior to July 4th. Bob McLaurin said that storage could be found. Bob McLaurin stated he would return to the Council next week with an indication of private sector funding participation, as well as confirmation of the AIPP's pledge to raise $70,000 from the community. The Council will review the project in the context of other capital improvements budgeted for 1998. The sixth item on the agenda was an update and funding request from Vail Tomorrow Community Center Coordinating Team. Stan Cope, a volunteer member of the Vail Tomorrow Community Center Coordinating Team, presented an update on the team's progress in advancing the concept of a Vail Community Center. He said the team has developed a community-based approach that would identify and prioritize possible components of a community center that would 4 s A ~ dovetail with a public process currently under consideration by the Council. The larger process under consideration by the Council would create a siting package for Vail's housing, parks, public facilities and open space needs, as well as a permanent funding source for housing. Stan Cope stated that once a budget is established, currently estimated at $20,000, the team would like to return to the town to request that it fund half the cost of the public process, assuming the Vail Recreation District (VRD) funds the remaining portion. . Diane Johnson, the VRD's youth services coordinator, expressed VRD's support for the - effort, although the funding commitment still needs to be approved by the VRD board. Councilmember Bob Armour expressed concern that a wish list effort might result in expectations that would be difficult for the town to fulfill, given space and budget constraints. Councilmember Mike Arnett echoed Bob Armour's concerns. Councilmember Sybill Navas stated a housing survey may be piggybacked with a community center survey. Bob McLaurin explained that a housing survey could possibly be piggybacked with the town survey, housing and community center survey. Other alternatives could be focus groups. Stan Cope addressed the concerns of not "boxing" in the project yet, they may not come up with a community center that everyone wants. We need to keep our minds open to what people may want. here are no givens as to what this project looks like at this time. They need additional data before making any further decisions. No action was taken. The seventh item on the agenda was an information update. There was no update. The eighth item on the agenda was Council Reports. Sybill Navas noted her attendance and involvement in the Vail Tomorrow Community Center Coordinating Team discussions, as well as the Seibert Circle neighborhood meeting. Kevin Foley issued a reminder regarding the upcoming Vail Recreation District board election. Nominating petitions for the board are due Feb. 27. Foley also noted his attendance at an Alpine Garden Foundation fund-raiser and at a Lionshead Master plan community meeting. 5 i v The ninth item on the agenda was discussion on other items. Councilmember Sybill Navas suggested consideration of a pedestrian crosswalk at the Municipal Building. Councilmember Bob Armour announced the upcoming Chamber of Commerce mixer at the Vail Athletic Club. _ The tenth item on the agenda was the Town Manager Report. Bob McLaurin had no further information to report. . Councilmember Bob Armour made a motion for Council to go into an executive session, and was seconded by Councilmember Kevin Foley. A vote was taken and there was unanimous approval, 6-0. As there was no further business, Councilmember Bob Armour made a motion to adjourn, Councilmember Kevin Foley seconded the motion. A vote was taken, and the motion passed unanimously, 6-0. The meeting adjourned at 10:00 p.m. Respectfully submitted, Robert E. Ford Mayor ATTEST: Lorelei Donaldson Town Clerk 6 RESOLUTION NO. 5 SERIES OF 1998 A RESOLUTION ESTABLISHING THE TIME FOR COUNCIL MEETINGS. WHEREAS, on February 17, 1998, upon second reading Town Council approved , Ordinance No. 2, Series of 1998, which provides that Town Council shall biennially establish the time of its regular meetings. NOW, THEREFORE, BE IT RESOLVED by the Town Council of the Town of Vail, Colorado, that: 1. The Town Council regular meetings on the first and third Tuesdays of each month shall commence at 7:00 p.m. Mountain Standard Time. 2. Town Council may, from time to time, adjust the starting time as necessary to meet scheduling requirements. 3. This resolution shall take effect immediately upon its passage. INTRODUCED, READ, APPROVED AND ADOPTED this 3rd day of March, 1998. Robert E. Ford, Mayor ATTEST: Lorelei Donaldson, Town Clerk Yc i C. ~ RECFIVED FEB 2 3 1998 I?1e• ~o~~~ ~Q;l Go,, i~5 7 bUVi 5 GOJ~ D t ~~OP k3 ~ !J G~ ~Di nr,- Z-e v~- 5k,,~ '0 c'k A CkQ~ ~ . (J 4 U ~e C~ ~A c.e iA a-¢, irle c, 9 2 ~A-e 1 1 G' rp, Oc f 8~~--~ ~a;~ Co: 8IG5 7 ~ REcOvFa FFS 2 3 ~ ~ebra~y 2~, ~uc~g &yor ~(?wl~ Va' ~ - - r Vu,Vo glUs~ ' - As a~ 6~0) Scas~ C~ 4op 231 l c~ HeVA le <a,XIl 1~y v?ew on ~6 ~febv~ Circle b yrea~, 5~e 00~ ''UuIe 4 n~a?ay tis Z ' k qfAnfQ 565 in510al 0 1 iie - ~aaalVj y k4uc, ~tii'R~ ~ 94ffln Gfe. C(Nilooce avy~l7~cfm 5J-1hy ~ w.elw- a yle,~ iaPa, G I tVlt-Q, qluq I P S}~us ar~ a nfz Lc~ 4~+{ are ~ o4AS vmW5 ~-or 4 ~~t ~ucs ara _ GcmBa,l ts d0% Gr k Q~ r or Qre, , ~o~~ ~~;s~-s ~-p~,1 eL?~,r, S c,t~~. -~s uy~e~~,~, 5'i r~cer ~ , - - q2j Vtl(,C,o g1657 - ~ , ~ ~ 2 ~ RECEfVED FEg p 3 19% , ~ 201 I aq~" T5 ~ , , ~ r~~ 7qrrnv_r~r,/ ~ ~ C~J7l L~/! `1~~,~(/, 1.Q/• &fl4,i oe- PO- baX i077 ~ v(Aj'1) CG S1656' f ~ RECEIVED! FE8 2 1 199g M f, Ro b PQJ rG wf~ 0~ v.~I 1 c04 ~ -Tcao on ~ebwa~ ~ 1 ~ `S e ` 4-V OV 5~ W~A ive, P\A r1: Sav~S ! vtYc A)v\e, i JeA 0-~ P~zfi _ s~~p~o~s ~of ~e ~ar~~ ~ Gore ~cee~ eJe ieQ5" fov\wJ ~j I t'Y1 ~Ok ,r~Pcn't~e-~e'(' 4-Ve pe;6~ ~ RECEIVED FEB 2 3 1998 i . ~4t 4231 ~i c~ U -dA le,. ftA-t ~ ,e,.6L ka t4 Lr,~ Zk 0 } ~ ~ 0~ ~ 22A ~ ~ - ~ ~y TOWN OF VAIL Office of the Town Attorney 75 South Frontage Roarl Vail, Colorado 81657 . . . , . . 970-479-2107/Fax 970-479-2157 TM MEMORANDUM TO: Vail Town Council Robert W. McLaurin, Town Manager John Power, Human Resources Director , FROM: R. Thomas Moorhead, Town Attorney DATE: February 26, 1998 SUBJECT: Council Compensation After Council's discussion regarding compensation on February 24th, Bob Armour referred me to Section 3.8 - Compensation of the Town Charter. That provision states: "The members of the Council shall receive such compensation and the Mayor such additional compensation as the Council shall prescribe by Ordinance, provided, however, that they shall neither increase nor decrease the compensation of any member during his term of office...." This provision clearly establishes why the Council previously had established the increase in compensation at a point in the future which would not be during any Council members present term of office. I do not believe that Council's motion to allow members to purchase health care is in conflict with this provision. This provision, however, should be considered for any further discussions concerning the increase of compensation. Thank you. RTM/aw rAcovncil.ecc L~~ RECYCLED PAPER ? u ~y TOWN OF VAIL ~ Office of the Town Attorney 75 South Frontage Road vail, Colorado 81657 . . . . , . 970-479-2107/Fax 970-479-2157 TM MEMORANDUM TO: Town Council FROM: Rob Ford, Mayor DATE: February 26, 1998 RE: 3/3/98 Council Ski Tuesday For your information, Rob will not be able to ski with the community Tuesday, March 3rd due to damaged knees. REF/aw RECYCLED PAYER ~ u ~y TOWN OF VAIL ~ . ~ Offcce of the Town Attorney • 75 South Frontage Road vail, Colorado 81657 . . • . . . 970-479-2107/Fax 970-479-2157 TM MEMORANDUM TO: Vail Town Council FROM: R. Thomas Moorhead, Town Attorney; DATE: February 26, 1998 ` SUBJECT: Week of March 2, 1998 During the week of March 2nd I will be in Aspen testing the competition's product. I will remain in contact by telephone and will be available as needed. Thanks. RTM/aw f:\council.mem RECYCLED PAPEX . . . _ . ' i •'C. Barry Friedman & Associates 11 The Pines Court Suite A St. Louis, MO 63141 (314) 434-8900 • Fax (314) 434-7710 Vall I own (_;ouncil 75 S. frontage Rd. Vail, C10 8 1 b51 Cient7enlen: I am a properly owner at 105 Vantage Point in Lianshead. I would like to urge you nat to increase the codes of builcling height on a across the board basis. 1 wou1d think that slloulcl be done on an indivrdual basis, J-ust the way it is done in V ail V illage, 1 know there are same bulldings in Lionshead that are talter than the present zaning law permlts, but most of these bulldings are on the 1-70 where they act as sound barriers and do not destroy the view for any of the people in Lionshead. I believe if you go ahead and raise the height to 93 feet you will destrc?y the beauty of Lionshead and make ii'i nothing rnore than another walled city. I can understand Vail Associates wanting to put up mor•e buildings but I dan't think you want to , destroy the Lionshead part of the village. I have been coming ta Vai1 for 25 year°s, and plan to continue to come for many more years, atid I would urge tlie council to ga slow in rnaking ari across the board exception on building heights. Sincerely, ~ Bai-iy M. Fr1i-,.dtnan Securities offered through BenefitsCorp Equities, Inc., a wholly owned subsidiary of Great West Life & Annuity Insurance Company 8515 E. Orchard Road • Englewood, CO 80111 MAR.,-02-98 MON 04:33 PM DFP ASSOCIATES, INC. 407 368 9644 . P.01 1699 1530 S.W. Mh Avenue ~ E300a RoXon, Florida 33486-1402 (561) 368-86" March 2, 1998 Vall Town Councii 75 S. Frontage Road Vail Ca. 81657 Dear Council Members: - As an owner In Varitage Point I am dismayed ta hear that you are cortsidering amendin8 the cuRent heEght restfiCtions of 48 feet to a maxdmum of 93 feet in Llonshead. - Before we purchased our home we researohed the helqht restrictions tq ensure us that our view o# the mountain would not be impecied. Once satisfled that the height restrlMlon was a maxfmum of 48 feet we purchased our home, • , Beaver Creek yfras an altemative conslderation for the purchase of a home at tha# tima The'?r111age of wallsn where no sunfight can shlne an the pedestrian walks was enough of a detriment to eliminate Beaver Creek as a viable altemative, tf the 93 fbat helght variance is approved it would certaEnly create a walled City surrounding the eritrance to the mauntain that wauid elimfnate or drastically ceduce the views of the mountain. While i recognize that there is no legal protection of pdvate views and no IeBal basis for retying on zoning regulatians remaining the same ln the light of changed conditiorts, you, as elected ottlclafs have a M4Rql. responsibility to preserve the views and . openness of Lionshead for those who have purchased under the exisiing zoning restrictions. Please keep the current height restrictfort vf 48 feet In eifect. DONT CHANGE iTl You tru , DF lates, c. Karf E. Pre sse President 03/02/98 09:14 FAX 3033671978 RAY LAMB RO1 FAX COVER SHEET ~ ti L18te. L F To: U c_~ Fax Number '?7 0 -,9.7 ? f PIS7 FRaM: Rayn4~ \-P, Lamb Fax/Te1. 303-367-1978 Comments: 2W vJ 1,aa~ m V- / r V v 2 . ~ ~ ~ 144 -s 'Iz Nurnber of pages, including cover sheet ~ LionsHead Master Plan ' • . 5 i ..x. ~ Subject: LionsHead Master Plan Date: Sun, 01 Mar 1998 18:21:33 -0500 From: Stephen Montgomery <smontgom@dreamscape.com> To: ssilver@vail.net I am an interval owner of the time share units at Vantage Point in Lionshead. I currently have a great view of the mountain from my forth floor unit, if the amending of the building codes were to go into effect I'd lose a11 the view and alot more--the whole experience of coming to Vail wouid change. I strongly oppose changing the building height restrictions--please convey my sentiments to the Council. Sincerely Stepnen Montgomery, syracuse,ny lofl 3/2/98 8:07 AM Proposed building code changes Subject: Proposed building code changes Date: Mon, 2 Mar 1998 19:25:30 EST From: BANJOJERI <BANJOJERI@aol.com> To: ssilver@vail.net Vail Town Council We are aware of the proposed changes in the building code regarding height and mass restricitions of new buildings. As owners of a condominium at Vantage Point we are obviously strongly opposed to such changes. It would not only spoil our view of the mountain but decrease the value of our investment. This I'm sure is of no concern to Vail associates but we depend on you not to forget the "1ittle guys." Even were we not owners of property we would be opposed to see Lionshead spoiled by big buildings. Lionshead has developed a special character over the years which we love and allowing bigger taller buildings would change that character severely. I'm sure several thousand other skiers have similar feelings. The future of Vail depends upon a great skiing experience. There are many other areas and mountains on which to ski. Don't make the mistake of catering only to a few interested only in bigger money. Thank you for your consideration. Margie and Jerry Ellefson N9730 Count Road W Colfax, WI 54730 1 of 1 3/3/98 7:28 AM r~,~ ~U1 ~ A /Lc-~-~..r- ' t1IYA~ `Y'" ~ ~ . ~ ~ f . February 27, 1998 Vail Tawn Council 75 Frontage Rd Vai1, Co 81657 Dear Town Council Members: After attending a session on Height and Mass Concepts and Alternatives, I hope to put a few of my concerns in writing. First, I think it is possible that the concept of taking each plan into consicleration separately may be workable. It, of course, places an added burden on the council and requires an enormous amount of trust from the current occupants and future deuelopers. I still have concerns about public gathering. As I stated before there are large numbers of people at the ticket office every morning waiting for friends. They do not simply get tickets and proceed to the slopes. Except for the bus stop, I have not noticed any other open area with this kind of gathering. I think you need to assume that this use will continue and allow for space for 200 or maybe 300 people to gather around the ticket area and space for racks ior them to place their skis. I have serious doubts that snow melting walks will stay in working condition. There surely will be times when snow removal equipment will have to be brought in. There has to be room enough for it. Corridors should not be narrowed and open areas to pile snow should lae left. Dumping snow in trucks takes even a larger area. The loaders back up and turn, as do the trucks, and they are large cumbersome vehicles. I am concerned that if corridors are narrowed there is not enough space for trash removal vehicles. We cannot expect buildings ta take their trash long distances ta be picked up. I'd alsa like to go "back to square one" for a minute. I was present for one walk around last summer. At that time I recall that one of the major concerns was that there wasn't enough "live beds" (not unrented condos) to support the commercial businesses. "A hotel was needed." Now the idea has been changed. Because of financial concerns the new development is to be allowed to have first floor commercial and condos above. How does this bring us closer to our goal? I still remain committed to parking requirements. Please see that the numbers stay up on the high side. It's not just day skiers. I think we will see that mare affluent people will start leaving cars just to use when in Vail and rental cars abound even though our public transportation is great. Lastly, but most importantly, I hope you will protect the views the current owners have of the slopes. I requested information from David Corbin at the February 10th session so I could review it before I wrote but he has not responded. Even so a huge building slopeside of any other is sure to take a great deal away from the present owners. I tend to agree with one member of the council who mentioned that the only place for structures of increased height is next to the highway with a general s.lope downward to the creek. Thanks for you time. Sincerely, Kdy Dukesherer Lifthouse Lodge cc. Davis Corbin ~ CHILDCARE (LIPS Created by the Childcare Resource & Referral, a program of The Resource Center March, April 1998 "Peace on Earth Begins at Home... " Volume 2, Issue 2 Funding Available foEagle County too childcare Capacity Child Find Program by Sharon Thompson BU11C1111g Research demonstrates clearly that the most critical time to positively impact a The opportunity for increasing c;hild- child's development is in the early childhood care capacity has come to Eagle County. years. The Eagle County School District, in Current childcare providers and those i.nter- conjunction with Eagle County Nursing Ser- ested in starting a licensed childcare fa.cility vices, otfers a free developmental screening are strongly encouraged to apply for fuild- program, called Child Find (formerly lcnown ing that will increase childcare slots and as Children's Network). This is appropriate hours. The goal of the funding project is to for any child from birth to five years of age. increase childcare availability for families Every child is offered a vision, hearing, benefiting fiom the Child Care Assistance physical, and developmental screening. Program run by The Eagle County Depart- Screenings are held monthJy and are ir,erit of I-iealth and Human Services. sclleduled irom 8:30AM to 12:OOPM at al- A survey was mailed to all exi:sting ternate ends of the valley. Familie,s may licensed providers in Eagle County. The schedule appointments by calling 845-5999, information obtained from these surveys or by calling Sharon Thompson at 926- will be averaged in an effort to increase 6858. Child Care Providers should feel free current county rates paid to providers to call with questions at anytime. The dates through the Child Care Assistance Program. for the next screening are as follows: Provider involvement in these pro- AVON EAGLE grams is greatly appreciated. We hope this April 3 March 13 will benefit providers and the Childcare Pro- May 8 fession as a whole. Please contact Kat:hleen Summer dates will be scheduled in Front at 328-8840 far more information on March. capacity building applications. S' ( T ~ For more information regarding The Child Care ~ 4& Assistance Program Contact Kathy Ross at ~ A 748-2007 i , PrOVICIeC' RNNOUNGEM£NTS ~ Spotlight * The Garfield County Association Wendy Kel1y has been a provider in Eagle of Family Childcare will hold a County for the past two years. The opportunity to rnini-conference on March 7, 1998 stay home with her young children, now four and from 9AM until 2PM. Lunch will six, while pursuing a child care profession was too be provided. Providers will be able good to pass. Wendy, an Illinois native, lived in to earn four hours of on-going Missouri and worked there as a licensed childcare crediL The fee is $30.00/per mem- provider for tbree years. She moved to Colorado in ber, and $35.00/per non-member. 1988. Wendy enjoys camping, reading, and listening Kate Lujan, the County Health to a variety of music. Nurse, will give a 1 1/2 hour Introdueing.... training on Universai Precautions. The tiome Observation Vrogram At present, The Childcare Resource & Re- * CORRA, the Colorado Child " ferral has been in contact with 35 prospective child- Care Resource & Referral Sys- care providers. So far three people have completed tem, is working to develop respite the pre-licensing classes and four people are half- care options for kids with disabili- way finished! This is very exciting , we all know the ties and for families in crisis. enormous demand! Please see enclosed information We want to help these prospective providers sheet. as much as possible on the road to their new careers. Spending a few hours at an actual childcare home is * REM I N D ER: Your local Child- a wonderful way to be sure the childcare profession care Resource & Referral (R&R) will fulfill all of their expectations. This is why we will be updating ulformation in want to implelnent "The Home Observation Pro- early March! Feel free to call us gram". This is a chance for already experienced whenever changes occur in va- providers to earn a little extra money and offer their cancies! ideas and expertise to a"new" provider. * Training manuals and videos are ALL VROVID617-S 6rPOTENTIAL PROVIDERS now available to be borrowed i INT6R65TED IN PRRTIUpATWG, from the R&R. These training PI_EAS6 C_Al..I_ tools were developed by West Ed TH6 RESOl1RGE i'~6NTER: Center for Child & Family Stud- ~~oTl ies. This four part set includes Wildwood Food Program eleven videos, four training manu- The Wildwood Food Program offers licensed providers a als, and seven guides. For more variety of technical assistance. Services include: record keep- information, please call 949-7097. ing, tax beneEits, calendars designed for the childcare profes- sional, workshops, recipes, craft ideas, tips on child develop- The (Zesour~e Gen#er ment, cash supplements, books about nutrition and other AAVOGatBS 5uddies Gourtwatch business-related subjects, and much more. Please call Ghildeare Izesouree gr Referral 970/945-7 i 21 for more information. q4q _~oq-1 HE16160 PROVIDERS! I bruary 24, i9.98 Look at tN-, 1rignt (5,id~z of Li f z for thc~~5z :who ; ' rniuszd' ft 1'$n_ rasry and'P"Qbru- i, The early childhood years, don't succeed, try and try arg M¢7-tinthe years from birth to age ` again." Sadly, some chii- ~Jdu mi~q~ o ; eight, are a good time- 'dren are aIlowed to think on .50mjZ_ r?_allq indeed, the best time to that one attemp or a series i n f o r m s t i;v Q; help children look on the of halfhearted attempts are tonttnuir~,o v-du- bright side of life. We can sufficient. Such thinking catian haurs. ; help by developing the right can lead to failure, feelings 'Dana Damm attitude early in life. ` of pessimism, and a dimin- taus~ht a~,out ~ POSITIVE , YOURSELF! ished sense of self-worth. profv_~66ionnliFm •Instill in children a desire to D- Help children be success- o€ thv,< January try, try and try again. As we ful. Help children think pos- ~~7_ t }n'd, gttd all know, life is full of fail- - itfvely about life and a posi- tive attitude. Be positive t~u~ht ~l~iVSLrsa} ures. However, we can yourself. Ghildren learn to "Chitauerl can & siioala ~~rQc;~uiian~ < at be immunizea a9a~rzst teach children that they da be positive when they have ii~sz flzbruary auepuession by ceac.h- not have to be satisfied with parents, family, teach- m¢¢"tins;. •~i hi4; ; iT,g chem to be opcf- failures, and that one paih ers,and oth.ers who look on Thank You tQ mistic insteaa or pes- to success is following the the bright side of life. both of Ibim2?f0~, ~ irntstic!' old adage, "if at first you th¢#r timiz nnd Qffort. ~1SO, : iYtank ; yoc~ to 3udy_ edotn ;for 'llbout tn¢ ea&, Coun.ty family (Day Carv- N**oeintion or~;aniizin~; 'thq, ` dg~tatln anci h~ipins~ hQr hu~ ~ The Eagle Valley Family enough for her to. keep it you are not a member al- <band >wi(tz thv, i Day Care Association was going. Thank You, Carol, ready, please do so now by devefoped about 14 yiaars for caring and for all your filling out the form on the `eu}ionA Cl$~~ : ago. It has gone through a work. The Association back and sending it in to the lot of changes in thosE; 14 should be important to ail of address listed. Ma rch; 6 AprU Years. For the last two us providers. The benefits >wiG~ be dect~eat~o! ' Years it was basically held of becoming a member are together by one spE;cial great. The support that you Asspc~utipw • lady, Carol Tatham. C:arol get from the Association is REM/NDER was president, secrer,ary, so important. The officers Laws, ott~er bus~ ; treasurer and everything care and want to provide Association meetings are w~ss vu:Atters avj, else rolled into one. It took services that help all atways on the second r)ettLUs.g ta K'u"'`' ; a lot of work and probably providers and enhance our Wednesday night of every eaeim other better. ; Would have been easier for profession. By being a month. The times and lo- 1"}°Pe 'I her to let it go but the Asso- member you also are able cations are listed on the ~M~Y~: ciation was impoi-tant to give to other providers.lf calendar. ¦ 0 c MAN I I e We would like to welcome ali ' 404101,-. _ It is for personal reasons and . newiy licensed providers. With sad regret the Janet ~ Schofielci is resigning as presi- dent of the Association. Please call Marsha or Caroi w/questions. ECFDCA OFFICERS Below is a form to fiil out for becoming a member of the Eagle gY PAYING THE $10.00 PER County Family Day Care Vice-President YEAR YOU MAY ATTEND Marsha Parmenter Association. ALL MONTHLY 524-7442 CONTINUING EDUCATION I ZGrJ CeCjar D(. PLEASE RETURN THIS FORM ALONG WITH MEETINGS AT NO CHARGE, P.O. Box 214 YOUR $10.00 cHEC?cTO: AS WELL AS ATTENDING _ Gypsum, CO 81637 THE M1N1 CONFERENCE'S CAROL TATHAM 524-9581 AT A REDCED RATE. - Secretary/Treasurer P.O. BOXZS2. GYPSUM, co 81637 PLEASE SUPPORT THE Carol Tatham EAGLE COUNTY FAMILY MAKE CHECK PAYABLE TO: 524-9581 ECEDCA DAY CARE ASSOCIATION. 747 Rangeview Dr. P.O. BOX 252 NAME YOUR SUPPORT IS Gypsum, CO 81637 ADDRESS GREATLY APPRECIATED!! PHONE LICENSE # , ~ I i . , The Childcare Resource & Referral is proud to announce a new program made possible by Learning Cluster funding: ~ , The Aetivity Visitor Program Hello! My name is Debra Ketterling and I will be your new Activity Visitor for Eagle C'ounty. I am willing to come into your home/center to facilitate training and to encourage age appropi•iate activi- • ties for the youngsters that are in your care. I have a B.Se. in Elementary and Early Childhood Education, as ~ well as 15 years of preschool teaching experience in Eagle County. Listed ~ are some topics to peak your interest and give you a taste of vvhat I would be willing to do fol a one hour training session. If you have other ideas , that are areas of "weakness", let's talk. Feel free to call me at horrie • 328-1604 (Monday all day or 'Tuesday mornings are best for now) to ta:lk or set up a Training. These FREE training's will eount toward your 6 hours of yearly training REQtJIRED for your child care license and are 'based on topics that YOU warit to learn more about. Techniques of Reading to Young Children Holiday Gift Ideas: Parent Pleasers Hands-on Science Thematic Based Curriculum Choosing Quality Children's Literature , Yitchen Science Sch.ool Age Activities Songs and Fingerplays ~ Science Art ` Painting without Brushes Creating; Take Home Fun Bags Music in the Classroom , r ~ Activity Boaes Creative Art • "Hoinework" for the Preschooler Puppet:s and Puppet Making Homernade Toys and Games ~ The Preschoolers "All About Me Book" . Discipline: Your Child's Worth It , ' This project must be completed bw May 31, 1998, so call early to set up a training! Aw)Zzot xAccqqA to be The 1998 National Association of Child Care Resource and Referral Agents (NACCRRA) Western Regional Conference will be held in Denver on Apri130-May 2, 1998. The conference annually brings a diverse group of individuals interested in child care topics and provides a forum for discussion, learning and sharing of ex- periences. Staff from child care resource and referral agencies, early childhood educators, public school teachers and administrators, Head Start teachers and directors, job trainhig office directors, county comnus- sioners, state and county departments of human services, state legislators, parents, conununity leaders and many others are expected to attend. The conference organizers, the Colorado Child Care Resource and Referral Agents and CORRA, the state coordinating office, are encouraging people with topic or sponsorship/donation ideas to contact us at the number below. Some of the topics expected to bc discussed include: Community Partnerslup and Collabora- tion; Public Awareness and Advocacy; New Ways of Working with TANF/Public Assistance Services and Families; Employer support; School-Age Child Care; and Funding. For more information registering for the conference of presenting at the conference, please call Monica Clancy at the CORRA Of~'ice at 303/290-9088 X201. _ . r y ~ ~ . The Resource Center ~Childcare Resource & ReferrQ! ;~~,p~ P.O. Box 2558 ~ Avon, CO 81620 ,~~fi:~ Attn. Town Council Members Town of Vni I 75 S. Frontage Rd. Vail, CO 81657 I . ~sw , + ~rt ~•r~'w'~,'4r` "~q`~ta5`' r ~ ~ ~~I~r+tiA~ ~~~:~ra~;\~'"~'' • ~ ~,1 ' ~r ~;r` .1 y „ y . ~ ~`~'1 w. `Y"~~~~ +a ~ 1.. , ~"'i~`' r'GY,"•i1 yr~ r.y;!°.~µ` .,i:~ ~ . r , . Ut'i~' . ~ ~ "~.~4 ~ &i . A .i • M~ ~i ~wr . r ` » • . ~v lti ~ ~ t ' x . . t ~ •A ' y T n .w c. . b ~,r . ,s,~+,,~,,~ . ,,t~ > h' r ; ,l ly : ~a' . Y ~(~~I~~,_"".. 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M~' r ~ ~ J• , •~j I 7 . . . . ~ . . . . , I ~ ti ~ • d ~ ,i`.,~ ~tl , , ,ri ~ 4• . . . , . ~E•w, c,~ . ~ ~ r~' . . • ~ • , . . • ~ ~ J ' ~ ~ • J'4 ~ _ . , . ~~~aS ~ . ~ ' "~F ' _ . .~',~;~~4,.~ iE~' • ~i., ? • ,1.'~.. : . , .r . . . , . - . . ~ . . . . , ~ (In thouaands except per share) 199b 1997 % change Resort Revenues $267,409 $291,203 8,9°!0 Resort Cash Flovt;' $$4,828 S 92,888 9.5% Resort EBITDAZ $ 80,630 $ 88,225 9.4% Net Income $ 19,462 $ 23,619 21.4% Earnings Per Share $ 0.57 $ 0.68 19.3% Skier Days 4,644 4,890 5.3% Ail f nanaal infarmatiori abom is pro forma for the IPO, and the merger witit Keystone and Breekenridge, as tJeogu h batit had ouumd at the begin?ring af the periods prGCented, and auludu a$2.2 million oru-time, pre-tasc reorganizarion char~e. a Resort Cash Flow u defined ss reve?tues fiam nsort operarioru less resort operaNng expenses, exctuding depnciatio?a and amortization. z Resort EB77DA u defined as Resort Cash Flow less corporate expense. Pd` • Generated record skier days, revenues, cash flow and earnings. • Completed acquisition of, and fully integrated, Breckenridge and Keystone operations. • Completed $266 million initial public offering on the New York Stock Exchange (trading symbol: "MTN") • Implemented the most extensive resort improvement program in the history of the Company. • With the addition of two hotels and 11 new restaurants, the company will manage six hotels, 72 restaurants, 40 retail and rental outlets as well as over 1,300 residential condominiums for the 1997-1998 ski season. Cover photo: Colorado's White River Nateonal Forest and the Arapaho National Forest are the komes for our resorts and among the public lunds mrenaged by the United States Forest Servece, our partner in providing recrestianal vpportunities af wo?dd-ciass caliber Eo aglobal pablic. VAILRESORTS, INC. ls the premier mountain resort operator in North America, with four distinctive Colorado mountain resorts: VA I L , BRECKENRIDGE, KEYSTONE° a n d BEAVER CREEK, . The Company and its employees are committed to providing excellence for our customers and profitable growth for our shareholders. Oiir Shareholders Fiscal 1997 was a remarkable year at Uail Resorts. ski market, and the industry as a whole. It firinly established your company as the • In June 1997, we launched a$74 million premier mountain resort operator in North resort capital improvement program that America, with four distinctive resorts - Vail, increased high-speed lift capaciry, expanded Breckenridge, Keystone and Beaver Creek. our snowmaking capabilities, created In 1997, we doubled in size, generated record 11 dining facilities, enhanced the financial results and made significant progress accommodations at our owned hotels, in executing our growth strategies. renovated base lodges, introduced new and As an integrated destination resort expanded on-inountain amenitiies, and company, our success must also be measured completed the Beaver Creek Village Center. in terms of the qualiry of both the service and • In September 1997, as the culmination of a experiences we offer to our customers and host of new marketing initiatives, we launched neighbors - who travel from near and far to a comprehensive airline-sryle guest loyalry take advantage of the extraordinary skiing and program for frequent skiers. Our new snowboarding, lodging, dining, shopping and "PEAKS at Vail ResortsT"" program rewards other fine services that we provide. By that customers who visit any of our four resorts. measureinent too, the satisfaction of our • During the year, we added to the strength guests, 1997 was a banner year of which we and depth of our existing management team are quite proud. through continued development of our Let me briefly review our major middle management, along with the addition 2 accomplishments in the past fiscal year: of several senior executives with extensive industry experience. Joining us were a new • We opened the 1996-1997 ski season with Chief Financial O£ficer, new heads of important new customer-pleasing amenities: Marketing and Sales, and new Chief including in Beaver Creek, a new European- Operating Officers for our Breckenridge sryle "village-to-village" ski experience along and Keystone resorts. with a 30% terrain expansion; and at Vail, a • After the close of our fiscal year, we acquired new luxury gondola and the introduction of two leading hotels, the Lodge at Vail and the Adventure Ridge;" our imaginative Breckenridge Hilton bringing the total mountaintop recreation and dining center. number of hotels we own or manage to six. • Our January 1997 acquisition of Breckenridge and Keystone doubled the A F o c u s o n P r o f i t a b i 1 i t y a n d size of the Company. Just as important, we G r o w t h These achievements are consistent successfully integrated these two resorts with the growth strategy outlined at the time with the operations of Vail and Beaver Creek. of the Company's IPO: create new attractions 0 In February 1997, we successfully to enhance consumer appeal; broaden our consummated an initial public offering, which participation in varied guest experiences; strengthened our balance sheet and gives us provide value through our passion for quality; access to capital that will enable us to pursue leverage our strong market position; and, our growth strategies. capitalize on industry consolidation. •By May 1997, we completed a record year in This focused strategy produced record terms of skier days, which rose 5.3% to 4.9 financial results for your company in fiscal million. This increase far outpaced the rate of 1997. Resort revenue rose 8.9% to $291.2 growth in both Colorado, the nation's leading million, on a pro forma basis, from fiscal 1996. SKIER DAYS RESORT RGVFNLIFS RESORT CASH FLOW ~ • orma, in thousands) in niiffion dollars) ,90 29L2 !5.00r 300 100 919 267.4 i0D 250 111 ii 10 1 1 1 Pro forma resort cash flow for fiscal 1997 was T h e Trai 1 A h e a d With this annual $92.9 inillion, up 9.5%. Residential lot sales report, our first as a publicly owned company, drove Real Estate revenue up 44.0% to $71.7 we hope to give you a full review of million. Pro forma net incoine for the recent the strategies, assets, and operations of year was $23.6 million, or $0.68 per share, an Vail Resorts. We trust that you will share the increase of 19.3% from the $19.5 million, or enthusiasm and optimism of our management $0.57 per share, in fiscal 1996. group that Vail Resorts is a special company, Revenue from sources other than lift ticket and one well-positioned for continued growth. sales was a key contributor to our strong There is something compelling and financial performance. While lift ticket sales awe-inspiring about these majestic mountain have grown consistently over the past decade, resorts of ours. Irreplaceable assets, they 3 revenues frorn our other business lines have remind us that achieving our growth increased at a much faster rate. As a result, non- goals over the long term depends upon lift ticket revenue as a percentage of toCal resort our respecting this inagnificent natural revenue has grown in recent years, and stood at environinent, which has drawn us, our 53% for fiscal 1997. We expect our other key guests, our employees and our neighbors business lines - Hospitaliry/Travel Services, here, and that keeps all of us coming back. Retail and Rental, Dining, Ski School, and a myriad of "other" smaller businesses - to Sincerely, continue to be an increasingly important part of our Conipany's growth going forward. The Achievement o_f Many When Adam M. Aron our guests arrive for a well-earned vacation cE,nivmot< <llid chte/'E.<<<trive O1t1«r in the Colorado Rockies, they are greeted by a staff that is renowned for the quality of its service. That Vail Resorts has been associated with quality for more than three decades is a direct compliment to our thousands of employees, and to those around us who • r have built our communities, who all work so hard and care so much about providing our guests the best vacation experience they can possibly receive. Oiir i w • Create new attractions to enhance consumer appeal • Broaden our participation in varied guest experiences • Provide value through our passion for quality • Leverage our strong market position • Capitalize on industry consolidation At Vail Resorts, we are focused on expanding networks, innovative recreational attractions, and enhancing our core ski operations while and improved base village facilities and increasing the scope, diversiry and qualiry of amenities are all among the improvements the activities and services we offer to our the Company has implemented to generate guests - skiers and non-skiers alike - volume growth. throughout the year. To move us closer to that For example, in the two ski seasons goal, Vail Resorts is guided by a five-pronged following the opening of Vail's China Bowl in strategy that has already produced significant 1988, which added 1,633 acres of open bowl benefits for our guests, our communities and terrain, annual skier visits at the resort our shareholders. increased by 17%. Since then, the Company has similarly 4 C r e a t e N e w A t t r a c t i o n s t o E n h a n c e benefited from other terrain and facility C o n s u m e r A p p e a 1 Consistently for over expansions. Skier visits at Beaver Creek rose a decade, Vail Resorts has demonstrated a 12% after village-to-village skiing was remarkable abiliry to enhance its consumer introduced during this fiscal year. Also this appeal and to grow its skier visits faster than its year, skier visits at Keystone rose 15% competitors. The Company's commitment to following the introduction of snowboarding enhancing the ski and snowboard experience with a significant investment in snowboarding on its mountains and the total vacation terrain parks and enhancements. experience in its base villages has driven skier Additional projects to drive volume at visit volume at the Company's resorts. our resorts have been completed in time for Introducing new terrain, state-of-the-art lift the 1997-1998 season. Among them are the 1997 VAIL RESORTS COLORAllO 1997 VAIL RESORTS MARKET SHARE U.S. MARKET SHARE IMPACT OP 1988 CHINA BOWL TE2RAIN EXPANSION D. L a o ii wo 0~ 0 I NON-LIFT TICKET REVENUE PER SKIEK DAY SHARE OF TOTAL VS. INDUSTRY AVERAGE RESORT REVENUE In another move consistent with this strategry, we acquired hotels in Vail and Breckenridge in the fall of 1997. Today, ' Vail Resorts operates six hotels, manages over , 1,300 condominium units, 72 restaurants and 40 retail and rental outlets. ~ 30 -20 Provide Value ThrouQh Our 0 Passion _for Quality Ouremployees' commitment to deliver the highest-qualiry service to our guests has made our resorts the destination of choice for skiers and snowboarders throughout Colorado, the installation of four new high-speed quad United States and around the world. This chairlifts; a 50% increase in snowmaking at historic passion for qualiry and its perceived Breckenridge and a doubling of snowmaking value by our guests has allowed Vail Resorts at Beaver Creek; and a wide array of to consistently achieve annual lead ticket on-mountain and base village improvements, price increases above inflation during the especially for families with children. past decade. For the 1997-1998 ski season we look B r o a d e n O u r P a r t i c i p a t i o n i n forward to continued quality enhancements, Va r i e d G u e s t E x p e r i e n c e s In the stemming from our dedicated workforce and 1996-1997 ski season, the four resorts the added value to our customers from our together received $59.55 in revenue per skier aggressive resort improvement program. S visit, 44% greater than the industry average. Yet the Company captures only about 20% of L e v e r aQ e O u r S t r o nA M a r k e t the spending by the average visitor. Thus, the P o s i t i o n The Company has taken opportunity to broaden our participation in significant steps to take advantage of its size, varied guest experiences is an important geographic proximiry and position as a leading strategic goal. mountain resort operator through innovative That is the rationale for Vail Resorts' marketing and technology-driven programs. expansion of its Hospitaliry, Dining, Retail Following the acquisition of and Rental and other businesses. This strategy Breckenridge and Keystone in January to expand these "non-lift ticket" businesses 1997, Vail Resorts combined marketing was successful in 1997, with food revenues databases, created the PEAKS at Uail Resorts rising 15% driven by the opening of six new frequent-skier loyalry program and introduced restaurants; and retail and rental revenues an innovative new website, all as part of a increasing 32% with the opening of nine new $20-plus million marketing campaign. Our outlets. Adventure Ridge;" our daytime and investment in technology also gives our nighttime mountaintop activiry and dining customers fully interchangeable lift tickets and center at Vail, was introduced in 1997, has resort-wide charging privileges that can make been widely acclaimed as one of the ski our mountains "cashless" for the convenience industry's most dramatic innovations in years, of our guests. and has added meaningfully to the Company's Our larger size has also enabled us to revenues. negotiate preferred relationships with some For the 1997-1998 ski season, we have 9,000 major travel agencies, to combine and expanded Adventure Ridge, completed the upgrade our central reservation services, to Golden PeakT" Base Lodge in Vail and the offer more competitive lodging and vacation retail core of Beaver Creek Village, as well packages, and to secure an increase in airline as added restaurants and retail outlets in seat capacity to the Vail/Eagle Counry and Breckenridge and Keystone. Denver International Airports. ~ U.S. SNOWBOARD RESORT REVENUES NOT VISIT GROWTH DEPENDENT ON SNOVI'FALL Capitalize on Industry Consolidation (in , In recent years, the ski industry has undergone , 9.2 rapid consolidation. Between 1986 and 1997, O Soo the number of ski resorts in the United States declined from 709 to 507. Two years ago, the ' " four largest ski resort companies in the United o 300 States represented only 16.0% of the market. ~ Today, the share of the top four operators is ~ 00 25.9%. At the same time, the U.S. ski industry remains fragmented, with no single resort ' operator representing more than 10% of total I 1897 88 0 skier visits. ' ' ~ The Company participated in this resort 1 consolidation in 1997, with the January market than we have seen for a generation of merger with Breckenridge and Keystone. entry-level skiers and snowboarders. Additionally, the Company has participated As a group, these younger Americans are in consolidation of hotel ownership within increasingly taking to the slopes on ~ its resorts with the recent hotel acquisitions snowboards. Between 1993 and 1997, the ~ in Vail and Breckenridge. We continue to number of snowboarder visits in the U.S. more i look for potential partnership opportunities than doubled from 4.4 million to 9.2 million, or acquisitions, which the Company is well an annual growth rate in excess of 20%. positioned to achieve. Another favorable trend is the emergence of new ski equipment. These parabolic or ~ "shaped" skis make it easier to learn and enjoy the sport, which we expect will drive future I n d u s t r y O v e r v i e w Vail Resorts' growth in skier visits. focused growth strategy should also be seen in While these favorable industry trends affect the context of several favorable industry all resorts in our industry, there is another trend trends. Undoubtedly we will benefit from a unique to our Company. Historically our key demographic shift, the emergence of the revenues have grown despite fluctuations "Echo Boom" generation. The number of in snowfall. Over the past ten years, while 10 to 24 year-olds is expected to increase snowfall has fluctuated significantly, revenues at dramatically over the next five to ten years, as Uail and Beaver Creek have increased in every the children of the Baby Boomers age. For single year at an overall compound annual Vail Resorts, this represents a larger potential growth rate of 10.6%. 199$ vs. 1997: Tor 4 COMPANIES' SHARE OF U.S. SKI INDUSTRY TOTAL NUMBER OF IO TO 24 YEAR-OLDS IN THE U.S. 16.0% ~'I WELCOME to COLORADO 0 at its PEAK TM Conveniently located within SO miles of each other, the Company's four resorts - Vail, Breckenridge, Keystone and Beaver Creek - attract guests from near and far to a region of tremendous natural beauty and some of the finest skiing and year-round activities available anywhere in the world. I VAIL/EAGLE COC7N"T`3f ATR,~'ORT ~ ~ _ . , BEAVER CIi,EEK ~ VAIL " i i I • , . ~j BRECKENKIDGE r - ' ~ ~ ~ VAI L VALLEY~~ , . ~ n , . ~ ~ . „ . . ~ . , ` ~ , , ~ ~ , SUMM[T COUNTY . . s~. ~ . KEYSTONE _ ~ ~ ; , . , ~ ` . w , . ~ ~ . ` ~ / l. !k; r~ A f! r~l~ . i I ~ , ' ' • ~ F,~ , ~ . . , . . . • ~ ` , _ ~ . ~ . ~ . , . • , , y b . ? . . a. - ~ ~ ` . . - • ~ : • • , i + aE~ . , . . ' i I I ~ 1~ . . ' I . . . h - • - - > w ~ ~y',T~jy~ ~ ~ • • . • • • • • • • • • • • • • • ~ + • • • • ~ fA ~ ! • 'w ~,~.'~ja*"~•~~~ . - • • a ~ - •~s ' ~ • . ~ • , ~ ~ _ , _ , . . . w • ik~~~ j; . ~ ll ; ` . y w ~ • rM; " ~ . . . . . ` 44'~' q~~~9w~xu~, , , ~ ~ ~ , • ~ w ~A 'I~w xY ,14 ~i ' • /r` . _ r . . • . . ;~A~~~f • k~~ p~ ^"~~4~li ~ 'r 9 !'~t . I, ~ • ~ ~ ~ ' ~ I f ~pa 11 ~ ~ V •1 . . ~ . , • . , ~ AX ; ~ ~ I 4 w ' ' i • ~ r p ' , ~ p , ~ W M VA 1 L is the largest, most popular single mountain ski complex in North America noted for i t s EXTENSIVE TERRAIN a n d 7M ,rv.. . . J~ 1 . LEGENDARY BACK BOWLS, SOPHISTICATED LIFT NETWORK ~ ~ a n d VIBRANT APRES SKI in a majestic valley with stunning 7N. y scenic allure. , • ~ . r ~ ~ , e:+i~+9 _ y- . . . ~ x , ! ~ ~6,:~~+~ r 4 ~ , t ~ ~ a rt~ y~' ~ • i ' ~ ~ ~ : 't f ~ ~ ' ~ ~ ~ • f ` ~ ~ ' . . . ~ , , ~ p. . x`' ' 'A ~ ~ . .~n : , M1 , .s ' . ~al\l~7° 1~.* • ~ . ~ . t a~ ` 'p ~4~~ 'y'~~~ R y, ~ . a . r ` , ~ ° ~ ;x-~ 4~ i` ' - ' ~ ~ , j io •'~y . ~ . ~ ~ ~ . + ` '4 •ti s J~ w~11'f.a+~~ . i . 1 . y , i~~~~~? ~w . . 1:61. f p ~ L " ~ , _ . ,L~ _ . ' " ~ dt ~ . . ..~.a. .~._.w . ~ . . , ..~...u.....~._w.._...~. ~ .-...¦rwr~ ~ ~ ~ e I . , ; ~ • • ^ 7.-AL, •..Ri~~ ( ° ~r~ ~ , ~ ~ • - . . , ~ ; . ~ Ir ~,,~i~~ ~ ~ ~d • ~ ~ ~ . L ~'t ,t. 4I *r ,*Y' Y. ~ ~ ~ 1 T}ti *Mr 71_ r'h . ~ , . ~ , •y , ..,-a.~ ( ~4{ ~ ~ ~ ` ~ a . ' . ~ .+~k ya~~+g;k ~ { w f* . 1 , + 1` 5 8i'. . a s ~ a k• . •TM~ . ` + 4,"i, Y . 1 ~t . ~ i.. .y, t ~ ~ i:~;,~~ 1,» 3.,'~n ~ t ~ + , AA ~ . . . . . _ ,7.. ~ . ~ p ' . . ' ~l ~ . ~ ~w k. . . , ~ . ~ VAIL • Largest, most popular mountain resort in North America • Consistently rated the nation's best ski resort • Home of the legendary Back Bowls • Lar est single-mountain network of high-speed chairlifts in t~e world • Leader in skiing innovations ~ D e s t i na t i o n t'ai! Since its opening 35 tremendous opportuniry to again showcase years ago, Vail has become the single most Vail around the world. ~ ~ popular ski resort in North America, offering ~ an exceptional combination of unique and I ji t li e Yl''o r k s The Company continues ` _ , varied terrain, favorable weather and snow to improve and expand the guest amenities conditions, a highly regarded ski school, fine that have made Vail so successful. Adventure dining and lodging, and exciting apres ski. A Ridge, opened in 1997, and expanded for total of 11 high-speed lifts and gondolas and 1998, was immediately recognized as an 20 other lifts transport skiers and snowboarders extraordinary innovation. 10 to over 4,600 acres of skiable terrain. The new 83,000 square-foot Golden Peak These attributes have led readers of leading Base Lodge, which opened for the 1997-1998 ski magazines to rate Vail the number one ski season, contains three restaurants, a large ski resort in the United States for each of the retail and rental outlet, as well as ski and last ten years. Vail's reputation is worldwide, snowboard school facilities. having been honored to be chosen as host of Additionally, over the next several years the World Alpine Ski Championships again in the Company intends to open Category III, 1999. Having hosted the 1989 World Alpine a major terrain expansion which will increase Ski Championships, this is the first time a the skiable acreage on Vail Mountain by more North American ski resort has been selected than 40% to over 6,500 acres with significant to host this prestigious event twice. With live intermediate bowl and glade skiing and global television coverage, this will be a snowboarding. VAIL sKIER DAYS VAIL AT A GLANCE , , , , ~ . , ~ , , -0. Intermediate , : e. - . . , . . . _ _ . , . , _ 'V~ o sinW e att' rtbute . defines T>ail better flian the legendary ~ L3ack Bowls, more tdaan ±even miles wide and ~ ~ . ~ nffering sorne of the rnost distiractive terrain and finest skiing in Nort}i America. t , n~S ~;•s ~ ~ - (I r ,~y . . ~L ~ . ~ ! , .sl .il / `i ~ ll . . .h Al ~M.. , . - 1- . , , . ' ~ f jS..^ t• I w4`'~'y-..ro ' ff • , f p~. ~ J~ +-1 r'" 1/: ;..,r. „ _ . 1 . ~ oL,. ~ - c Adventure Kidge, I/ail's daytirrie and reighttime mountaintop diniriX and activity center was a first for Lhe ski industry last year. It o~fers seven The magnificerit new Golden Peak Base I.odge and restaurants and a wide range of high-speed quad chairlift revitalizes the easternmvst winter activities including sledding, access point to Vail Mountairi and provides quick tubing, ice skating, snowmobile tours and easy aaess to the Back Bowls. ~ and a children's snoupark. ONCE IS NEVER ENOUGH. BRECKENRIDGE is the second most popular ski area in North America that offers VARIED SKI TERRAIN, OVERLOOKING AN HISTORIC VICTORIAN MINING TOWN ~ 71 that gives Breckenrid e an 4-1 authentic Colorado eel. . } ~ t~.. S ~ 4 s~'j ~l d R^~< • t'.. ,174 ~~4c r a, a' a~ '~tr i y ! 9 ~ .,~.~~,`S't~ I~ . I f ; r i,x,~ ~ _`f . ~+~~+n ~r~ s, g~ ''fl4~~ ~_,fyy.' .s i .e. •r. ~ ~ ~Y° ' s _ ' ~r~~ ~~id+ l X, 71~~~ 1~: =k.r 1. k r ~J. ".r•.~. . r. ~rb ,^Y . ~Ys y~. _ . ~ .u. ~ : N: ij; t ' ~ + ? -i~~ ~ .~{~''d'~'`t~~r{ ' , •r i' , ` ~ ~II ( J ` ~ ':,~'r • v ~ . ~ . ~ . ~ Abi ~ • ~ _ ~ ~ ~ . .y _ . ur a ~ r~~~ ^ t 'F.Ya • ~i..i:: ~ .r w wF . . . • ~ d ~ . x" - ~ ~ . ~ ' ~ ; p,~ , . ~ . ~ • v M 1 ~'1'{:~ . a- ~ . . . a a li~ .j, . . . , • ~~~i-~ ~ , . . ~ ? , • ; j . . ~ 4~~~~~,~ i r k ~ af rMr ' w~ . . . . ~ ' 4 „t ~-A ~ ~ ~ f' ~ . • J.~ 4 w.,.- . "7 1 ' • ~ . ' ~ y~ i ? . . . ~ . s5. . ~ . ~ ' i a . ~ 2 ; t , t~~~^ ; . r .y. . . . - t . . . . ~ . r. . ~ ' . . . . . ~ . . . a ~ w. . . ~ k~ Ar,l . ~ . . 'T . . -o~ x , c ~ ~ ~ f tr' I ~ - ~ ~ P:~ 'a' • d .i { a ! ~ ~ ~ry ~ _ ~ .i~. I ~ . ~ ~ f ~ ' ,~,~~4ky y :e . ~~~p ~ ~ • + ,r ~~.+y• ~ ~ 'T ~ ~ ~~iir';~` y8 .r " 1 M I* r 4-. s ~ ~ ~ : . . w . t u' * r ~ ~ s. e - ' ' . L ' ^'53.~ - ? ? - ..._.n[ .u ' . r ~ . Y- ~ ;~rt* ~'k~ ;~'~li, x ' i'~~, ,r~~ ~ . , '"7 t •y i`-.. f_.~: _ - . _ - ~ 1. ~ Y .7LI~5~.. - ~ .d . , ~,J~,` ~ ~•r _ . ~ . . ~ . ~ . . , ~ y b' d: _ , y.~w..,. . . . ~ . . . ~ ~ ~^v.:.-n-..-..-.. . . ; ..~...~.~~......-~..~..~+..~.v:.-..:~.:,...., ~,t~>,.. . ~ ? . .n .,:...t-~.._ .e,~ ~ I , , . ~ 1.~ . . ~ . ~ +iwen„M1 I ~ 1 . ~ ~ BRECKENRIDGE • Second most popular mountain resort in North America • Four interconnected mountains with diverse terrain • Extensive guest lodging, shopping and apres ski • Located in an historic and charming Victorian mining town • Many year-round festivals and events create local character B t-o nd A p p c a 1 Breckenridge, located 85 resort by implementing many improvements miles west of Denver and 40 miles east of Vail, to on-mountain facilities. is second only to Vail in the number of skier visits among North American resorts. With In t lr e I,Vo j-k s During fiscal 1997, Vail more than 2,000 skiable acres on four different Resorts invested $18 million in resort mountain peaks, Breckenridge offers excellent improvements, the largest investment in terrain for beginning and intermediate skiers, Breckenridge's 36-year history. The Company as well as open bowl skiing. added two high-speed quad chairlifts and Reknown apres ski activities, extensive expanded snowmaking by 50% to increase 14 lodging capaciry and the Victorian grace mountain capaciry and to ensure better early and energy of the Town of Breckenridge and late season ski conditions. To capture a have made this resort an attractive destination greater share of guest spending, the Company for national and international guests. has also expanded the ski school, added On-mountain, the Company has significant dining options and increased retail and rental opportunities to increase skier capacity, open operations. In October, the Company also new dining alternatives, and add retail and acquired the 208-room Breckenridge Hilton, rental outlets. After acquiring Breckenridge in the first hotel properry to be owned and January 1997, the Company took immediate managed by the Company in Breckenridge. steps to build on the historic success of the BRECKENRIDGE sKIER DAYS BRECKENRIDGE AT A GLANCE , Ski . • 0 „ . , 0 ,o , , Higb-Speed s Intermediate % Beginner 4 Two neu, higli-speed quad d2airlifts were part of $18 million of resovt improvements at Breckenridge in 1997. This anvesCrnent ~ alone isgreatev tknn Breckenridge Moun~tain has receiu~ed c~ver ~ -.r. ~ tlae pnst dcrorlc. r.. ~ , ~ ~I 3 ik-11, f;~ r , . , , . ~ V. .i~. ' .M •.y' . , • . t . i r '7~ . ~ . ~ ~ , Y ~ Breckeiiridge is lioriie to rnariy specinl cveras e,h~ h ; year, including our annual january trihute tu tke Norse God of Winter, LJllrfest. i IS ~ ~ _ • t - i hrv` .8~~~ . • Y b.J ~ • ~ u ~ , , _ - .'y' i- . ` . ,~p. . ~ 13reikrnridgc br~zejit;Jeo~ri itc lucatio~~ in an liistorii l~iitoii~n~ ~niniir~~ t~~i~~it ii~irh i~~~n~e tlir~it 20, 000 beds, 70 restaurants and 130 shops. 0 BRECKENRIDGE GOLD RUSH TOWN. PURE RUSH MOUNTAIN. K E Y S T O N E is North America's third most popular ski resort that features THREE CLASSIC MOUNTAINS, ' WORLD-CLASS DINING AND EXTENSIVE ~ NIGHT SKIING #fi~ x in a planned family-oriented ~ communit offering a variety of year-roun activities. ~ ~ ~ . . ~ . t ~ : . . . , . . . . . : . ~ # r .t~t ~ . . . . . . t. • + " t . ~ , ~^.1 . ~ Q+ a . y . . ~4 • . . ~ 1'.. _ • . h A. : ~a. : . Y..~ . ~ ~ - ~ . '-c" ~..~'ae:~ • 6 . ~ ~ ~ .s ~'s~. . ~ : . ? ° 1~ ~(i ' ~r~ ? ~a'q1A • g ^ ~~.:k~ y1 ~ "^P i ~M~j°: ~4. ? o. i ~ t ~ ~ • ' ` • . ~ ~ ~ • ~ . a~ ~ , ~ 'a .~,~y a ~ , ( ~y , ~ t n ,Xrr9 x ~ 'p.;,,.. *w ~ , . ~ P • ` ~ ~ :m ~ III ~ 1 ~#MAY . ~ ~ . . . d~~+'.,, . ~ ~ j~'•j, r~.. u I e 6".` :t ~ { ~ ~ y _ . ~ ~ 1"~ ~ , is'•{~ . ls,,: , ,---,I--- , ~ , y ~ !~I, • 'y~ J A ~ <r wim > w . ~y,,..' ~ S Sx Y . ~Y S Y' ~ , x,~ ~~~~z~ , ; _ . . , r? . , , ~ , ef d >b z, y~~;A. k:.id Fm hN,~R wfc ~ ~x ~ ~ Ra r~se 3 ~ + ~'1 ~ it w ) e tr ~ , . . ~'yj?': IL'~y~"S~,/~, N N , ~ , ~ s~r~ •J , ~l~~"` ' ~ ry ' ~ r ~ , • x e. m i ~ > o . x t ` ` ~ • . Y ~ v , ~ ~rf~~ ~ ~y ~ ~ - , . ~ U x ~ ~ t:. I f` ~ n.. ? ~ > ~ . n ~ s , r . . , . . , . , , . ~k r ~ . • ~ . , ; , . .y . ~ . . . ~ . , ~ . . ~ , , x, 4 . ° . ~ ~ a ~ ~b ~ . . ¦ ~wi. KEYSTONE • Third most popular mountain resort in North America • Vast snowmaking capability ensures long ski season • Extensive night skiing • Family-oriented community with five distinctive neighborhoods • Highly developed hotel, property management and dining businesses A L o ng e r S e a s o n Keystone offers over is also a planned, family-oriented community 1,700 skiable acres on three mountains linked with five distinctive neighborhoods at the base by a network of 20 lifts, including two of its mountains. Of these, River Run Village, high-speed gondolas and four high-speed with its award-winning architecture and quad chairlifts. With extensive snowmaking design, is Keystone's newest communiry. capabilities that cover 49% of the resort's With the completion of another major skiable terrain, Keystone is usually the first phase of River Run's development this Colorado mountain resort to open each autumn, River Run now includes 165 18 season and one of the last to close. The resort residential and lodging units and 65,320 also boasts 131ighted trails that offer the square feet of commercial space. largest single-mountain night skiing The master plan for River Run together experience in North America. with the build out of Keystone's four other neighborhoods, calls for 4,600 residential and I n T h e Wo r k s With the Arapaho National lodging units and up to 382,000 square feet of Forest as its backdrop, Keystone is a place of retail and restaurant space to be built. And, as a exceptional natural beaury, where much of the complement to Keystone's Robert Trent Jones, surrounding forests, streams and wetlands will Jr. championship golf course, the Company broke forever remain natural and pristine. Keystone ground on a second 18-hole course in 1997. KEYSTONE sKiEa naYs KEYSTONE AT A GLANCE Ski , O ; ~ „ ge Elevation ",300 ft. Summit Elevation 12,200 00 ft. „ . 0 ExpertlAdvanced ' . , , , Chairlifts . Intermediate . Beginner , - Renowned for its fine dining, Keystone is honie to two restaurants that hnve received the pvestigious AAA Four-Diamond rating, including the : , Alpenglow Stube. ~5~ _ ~ ~M.~ 8 * pi. , ~ II .I ~ ( ' ~ I+ ~ ~ "ti ~ • ~ 1 ~M ~ r b , srr-: a R ` ~ The largest facility of its kind in the Rocfr}, Mountains, the Keystone Conference Cewcr o. generates approxivnately 80,000 room ru'glu> each year at the Company s owned and managed properties. 19 7717- ~ ~ Keystone's night skiing operntion is the IavQest sitigle-moutitaiii night skii1~g expevience in Nnrt{i America. ~ KEYSTONE THE NATURE OF THE ROCKIES. ~ ' . i ~ . . ~ I . i . i ~ ~ . . , ~ . . . / A ..I . ; ~ . . , . ..+I x~, . . . . , j ~ ~ ~ . ! • . . , . , ~j, ~ I II ; ; ~ . ~+i ~',l 1 i yi~ •~i l # l , D•. P1 I'~ ~ . ~ti~ ~ ~ ~ , ~i ~ ~ ~ l • ; i ~ • ti'~ ~r ~ -k• ' ' • i.. ~ 7 ' • _ ~ 1" ~ ~ • ' ? 1 S ~.N.. - ~ f4 i4'^y~~~~~3.= ~ TrtG~ ~~d. w.. s , ~ . "iy;~ ~ . ;~y~-' y~w~ R~ . . . . ' ~ " ~ ~ I1~. ~ p i ~ . ~ ~t a " :4'~ ~ • f '~':R"' . • . , , ~ ~ f i 1+' . ' ' I ~ • ~ . s . ' ~ P ~ ~ ~ . ~ • ~ 4 ~ i ;f ~ , t ~ I~: . • ~ . - V . . _ _ • ' ~ ~ , _ F,_ : . . . _ , . . . . ~ w4;,~ ~ : : BE"ER CREEK offers impeccably groomed, 'T* SKI TERRAIN SFAN:NING ~ • SIX MILES ACROSS, A 1VIAGICAL NEW VILLAGE CENTER, ~ a n d is one of the world's most pristine family-oriented . mountain resarts, ' , • w r . L ~ ~~`~+f! :.r 5 f ! k~ I~ rf p'~ .y Y ~1 L E:. ~r~ I f Y ~`ii' ! ~ t~'; # 1 i . . p i • i~~. I t yY~' ,r x1 ~~)t ~F ~I'' Yi . ~i i ~ ; 4.,i . . , ,'.~t. . ~ ' .Y- . . ~ ' ? f ~ - • „ , aj w a , " ~1 ~++~R~,,.. . . _ =t-" • ~ , ~ .~"~!!'^~~~y , ~.A ~ ~~~~y • ~ . . 1 ~ ~ ~ ~ M £ ~'~7' ~ ~K 'T • _ . r _ ,i. • ,iR ~~.j';k~. ,~;~i...~"-~ Y' ~Y . . . i ~ . x~ ..yIY' _ 1 ~ ~ a • r ~ • ~ ~~E~ , r ! ~ LAa~ W1 A r efc,. t~' ~ v * x£ ~ f?. ~ +wy•~ ~~R R . ~ * ~ y r . y Jti 9 . ' 1. • . ~ ~~y ~ ~ y .~R' s• y~'`' I~ ~ ii - ' , y~ . r . ~ ' r ~,y'' { ~ ~R' ` ..~p ' • Y'" . ~~E << A ~ 1 i'i~..~. • h ~ ~ ~ ..rn ,'~,~~'~~Y~~~. }~Y~ ~ i~` ~ . _ . . ~~~x~ • J. } t C 3~ ~ ; y . ' i~nr ~*a!~p BEAVER CREEK • Elegant family-oriented mountain resort • European-style village-to-village skiing spanning six miles • New Birds of Prey World Cup downhill race course • Home to a new 528-seat performing arts complex • Village Center completion adds great charm and new revenue opportunities Pristine SettinA, Superior Service liftsanditsnewBirdsofPreydownhillrace Beaver Creek is one of the world's premier course is reputed to be the second toughest family-oriented resorts that offers guests a in the world. superior experience in a pristine alpine setting. Since opening f o r the 1980-1981 season, annual I n t h e Wo r k s The Company's skier visits have grown from 111,746 to 644,456, commitment to qualiry can be seen in the making Beaver Creek one of the fastest growing recently completed Beaver Creek Village ski resorts in North America. Even prior to the Center, which represents the completion of completion of the new Beaver Creek Village the Beaver Creek master plan as envisioned 22 Center, the 1997 Snow Country magazine nearly 20 years ago. With the feel of an rankings named Beaver Creek as the fifth best elegant alpine hideaway, the village now U.S. ski resort. features the 528-seat Vilar Center for the Arts, Beaver Creek provides a vacation experience an outdoor ice skating rink surrounded by distincrive and varied from Uail, which is many new retail shops and restaurants as well located just 10 miles to the east. Smaller and as additional luxury condominium units. more intimate, Beaver Creek nonetheless With Beaver Creek Village now complete, offers exceptional skiing. In fiscal 1997, the the Company will be focused on the build-out Company completed the first step in creating a of Bachelor Gulch Village and Arrowhead European-sryle village-to-village ski experience Village, both of which offer substantial by linking Beaver Creek, Bachelor Gulch and opportunities for slopeslide lodging and skier Arrowhead with intexconnected trails and ski service facilities. i' BE.4VER CREEK sKIER DAYS BEAVER CREEK AT A GLANCE (in . , . , 600 , . -00 ft. " Summit , 41 o, ir ,c- Too Vertical ' 41 ft. . ' I Higb-Speed . ~ The World Championship Birds of Prey downhill is one of the most dramatic and challenginA courses in the world, and will play host to the 1999 Wor1d Alpine Ski Championships to be held at Vail and Beaver Creek. Beaver Creel Village is nothing less than magical, the result of two decades of effort, capped most recently by three years o, f - rAOii-coniplcted a,rutructron. ~ f a i, r " , , . , i , ~i? / U ~ _ ~ i . ~ . . ~ .:J A , , ~ . - `il~s~,~.~ ~ ! ;7 ~ . j, . - ~ _ , , _ . ~ - < , , _ . . . T y u 23 ~ .r h . ' - .~...b, ' • . a:,.• 7. x . ~ . ~ , 1 ~ ,,,,JJ? w'~x~ d' f, ~ v ~ ~ ~ t ~ - . ~ A M.~r~~ ti ~ ~ ~ A . Iy p ~ ~ q} h` ik ; ~ `0 1, • Vpr"„1, ~q°~'w ' P ~ y~ ~ I~ •`n. 4y ~ o ~ , ~ ` 9 ' Ve~ ~ i" k~ Y ra7!'?SS~ . 1~ • ~ ~4 ~ `wr. Ms. ~t 1 ny ~ ~ ~ ~ .vi. 41Y4 I i' , . \ ':,LL 't~`}~ . `,Wyd° R~~ 4 41`~J ~ Y;,f~~~~•,~ a ~ W~~,~u~~- .a~ ,a eww'~. ~ ~ ~i sr. i ~ V a"~'.:. ` k` ~w ~ el .{'i~:. •6 ~ 'Al ~ v a M ~i } ..J~" v`~ ' • ~ _ rs^' " w ° 6t, . 1"'Y 1/ t 1( • _ _ ~ . y , , ~ • ' r ~ ~i.. k~ '~q, CHELOR,GUL'~ s PVD..W-AD ILL . v C _ . . • . 3 ~ ~~-•S's~ ~u _ _.L . ~ . p . . ~ . , ~ _ . G G -,r .:.x. _ s : ,~:e~4~~°r'~..~~'tT", 1~,~ ! e%w"yaarrA . ~ ~ ~ - ~ 9 ';.,~a~ ~ ..._._.M•- - - ' ~ s~ . "ffi`"s` ,`6'~ ? W .~\~~W ~r-.~.. _ - m ~ . A. Beaver Creek, Arrowhead and Bachelor Giilch oyer European-style village- to -village skiing through interconnected ski lifts and trails. ~ • ~ THREE VALLEYS AND FIVE STARS. . VAILRESORTS, INC. 1S arl inte rated destination resort com an g p y with many diverse operations includin g: HOSPITALITY, DINING, SKI & SNOWBOARD SCHOOL, RETAIL AND RENTAL and A MYRIAD OF "OTHER" BUSINESSES. The Company is committed to enhancin the ran e and g g quality of services offered to its guests, HOSPITALITY AND TRAVEL SERVICES The Company's hospitality operations provide guests a full complement of quality resort services and provide the Company with additional sources of revenue and profitability. These operations include reservations, tour and travel operations, lodging, property and conference center management. Through creating preferred relationships with major travel companies, capitalizing on its customer database and improving cross-selling of ~ its activities and services, the Company believes it can significantly expand its hospitality ~ operations and positively impact the Company as a whole. Additionally, there may be ~ opportunities to expand the lodging and property management business through selective acquisitions or partnerships with already established businesses. The fall 1997 acquisitions of the Lodge at Vail, with its 117-rooms and managed condominiums and the 208-room Breckenridge Hilton reflect this strategy. * ~ ~ * * Supporting the Company's overall Tiie Lodge at T/ail, lorW a T/ail landmark, is vated one of t{te hospitality business is its central reservations besC vesort hotels in North Anierica by Concle Nast Tvaveler. ; operation, which offers complete vacation h~r,,;l f packages for all four of the Company's resorts, ; including airfare, ground transportation, lodging, lift tickets, ski and snowboard lessons and other activities. Travelers can enjoy the ~ convenience of planning their vacation with A a single phone call in which the Company V' ~ ~ also has the opportuniry to cross-sell activities ~ and services prior to a guest's arrival. With i -~,~r,. ~ the consolidation of all four resorts' central reservations operations this past year, the ~ Company is well positioned to leverage its ~ reservations capaciry and expertise to both drive and benefit frotn future hospitaliry . I ~ business growth. , . ~ ~ HOSPITALITY i~f~'~~~~`' HOSPITALI iY SHARE OF RBSORT ~ RpvFrvuF. REVeNUF , i i ~ r 1997 35 ~ y ? 31.8 { 0 25 - Ovrr L, ?UUprivate roildominiiatrtc inartagcd arid reiatcd by the Campariy are rnudi sought after by vacntioners, and vepresen t a profitable part of td~e Cornpar2y'.r bwsiness. 96 97 1 DINING Vail Resorts offers its guests a wide variety of dining options: ranging from the top-rated Keystone Ranch, Beano's Cabin'" at Beaver Creek and the Game Creek ClubT"" at Vail; to affordable family dining and trailside express-food outlets; to apres ski and nightclubs. The Company operates 24 on-mountain and base area restaurants in Vai1,17 in Beaver Creek, 8 in Breckenridge and 23 in Keystone. Together, these 72 restaurants contain 11,000 seats to provide our customers with any type of dining experience they desire. * ~ * * ~ By owning and operating a diverse group D I N I N G of restaurants, Vail Resorts ensures service D i N iNG S H A R E o F R E s o Rr qualiry and participates profitably in a R F V'I-N U G REVENUE significant portion of the guest experience. As a result, the Company has actively expanded 45 its dining operations. The Company opened 38.1 11 new restaurants for the 1997-1998 ski 35 season, including the year-round base village 25 restaurants, Rendezvous, Toscanini and the 26 Dusry Boot Saloon in Beaver Creek Village, as well as BellaRiva in Vail. 15 There is a substantial opportuniry to Diing dining at each of the Company's resorts and especially at Breckenridge, where food service revenue per skier is below the Company noY'm. In adClltlon, with the Bearao'.r Cabin at Beaver Creek, like the Alpenglow Stube eXpansion of its dining alternatives, the at Keystone and the Gavne Creek Club at 1/ail, offers fine Company is increasing its participation in cuisine in mountaintop splendor. apres ski, evening and year-round businesses. . . r~..,.•~ ~ ~ ~ ± ' ~I 1 A I . M ' M~ ,w•l- ~ 1 °..i ~ . I._ ~ ' . ~ ? ~ . ~ . y' ~N ~ r , • ~ F . k ~ 'IIII „ ; .z_ A • - _ - . _ , ~ • a. ~ . . ' t ' ? II ~ 17ie BI»r .Llooii 13ar, wliicfi upcricrl m 1997 at tlir ro] of T/ail Motirataira, is aaessible day and night via the luxurious Eagle Bahngondola throughout the year. ~I SKI AND SNOWBOARD SCHOOL Vail Resorts operates an extensive ski school that offers group classes, private lessons and specialty workshops for skiers and snowboarders from beginner to seasoned expert. With more than 2,200 instructors across four resorts, the Company's ski and snowboard schools are the largest in the world. One measure of their quality is the guest participation rate, which historically at Vai1 and Beaver Creek has been higher than that of any other major ski resort. The Vail and Beaver Creek Ski and Snowboard Schools have grown 58% since S K I S C H O O L 1991, and are a source of significant revenue S K I S C H O O L S H A R E o F R F s o RT REVFNUF , REVENUE and cash flow for the Company. The Company believes it can increase ski and snowboard school participation rates at Breckenridge and Keystone by introducing the incentive compensation programs for 30 instructors and new lesson products for guests that have driven historical growth at Vail 27 and Beaver Creek. 25 The ski school is also well positioned to benefit from the growing popularity of snowboarding, due to the Company having been a leading innovator in instruction over the past five years. ,4. t y '~J "F ~ 4 _ T Yi ~ ' -_4 ? . Snou,boavding, orie of the fasfest ~voi+,iriy cpovts iri tlie • ' . ; _ ~ mur2try, has Ervoiag{at tiew eriergy to winter rerreation. ~ ~ ~4~ , l ~ ? 1 1 ~ ~ , ~f ,'~j =HiAkly trairaed bistructovs irirvoduce thoiasands i _ of childrer~. every year to the magic of skiing. , I ~ RETAIL AND RENTAL High-end ski and snowboard wear, skis, snowboards, hats, gloves, goggles, sunglasses and resort-related logo merchandise are among the many items available in the Company's 40 retail and rental outlets. Eleven of these outlets are primarily ski and snowboard rental centers located at the base of each of the Company's resorts. The Company also operates three on-mountain New Technology Centers` ("NTCs") at Vail and Beaver Creek that offer guests the opportunity to test the latest ski and snowboard equipment without leaving the mountain. In the past year, Vail Resorts has taken several steps to expand the scope of its retail R E-rn ? L and rental business significantly to generate R s rA i L S H A R E o F R E s o x-r REVF.NUG REVGNUE additional revenue and cash flow. With the nine new retail and rental stores that opened proor a dolLus) in fiscal 1997, the Company experienced ' 17.6 significant growth in total retail space. For the 1997-1998 ski season, the Company 28 has opened three additional retail and rental outlets including two new stores in the recently ' completed, slopeside One Beaver Creek. Opportunities remain to expand retail and rental operations selectively across each of the Company's resorts. Staffed by knowledgeable employees and stocked with the latest in form and function, the Company's retail otietlets can e;ll ~ y fill d1i°.t'uc~t's cvery viecd. M , - \ . . . , _ . . . . ' . `k , . T ~ ~ ~ ' ~ _ _ f P"~ ~ ~ ~ ~ d . , ~ , . ~ . , t a . , r ~ ; . . . ~ . ~ . g _ . ; ~ Aewl ~ Snowboard sales and verital., represeret an ever-increasing line of business. _ "OTHER" BUSINESSES To enhance the appeal of our resorts throughout the year, Vail Resorts operates many other additional businesses. The wide selection of activities and services we offer helps generate resort revenue per skier visit that is 44% greater than the industry average. GOLF ANI) SUMMER RECREATION LICENSING AND SPONSORSHIPS After the snow melts, outdoor ~ With its world-class resorts, enthusiasts enjoy golf, tennis, m the Co mpany's brand names rafting, horseback riding, scenic ~ are recognized worldwide. To chairlift rides with access to leverage this brand identiry and ulountain biking and hiking the attractive demographics of and other activities available in its customer base, Vail Resorts and around the Company's resorts. Surrounding has entered into revenue-generating sponsorship the Company's resorts are 14 world-class golf agreements and strategic alliances with world-class courses. To capitalize on the populariry of golf, business partners, including such highly-regarded Uail Resorts is currently planning three 18-hole companies as Atlas snowshoes, Bailey's, Bolle, golf courses at Keystone and Beaver Creek, Chevy Trucks, Coca-Cola', Compaq, Coors, in addition to the two courses the Company Evian, FILA, Microsoft, Pepsi, Sprint and currently owns and manages. TAG Heuer. ADVENTURE RIDGE AND WINTER RECREATION C Cl M M E IZ C T NI_ L E A S I N G ReCOgnlZlrig t11at Located at the top of Vail ' rhe appeal of our resorts is made Mountain, Adventure Ridge more unique and is enhanced 29 offers a wide array of winter by the passion and creativiry of activities, including day and iiidividual entrepreneurs, the night ice skating, tubing, Company leases most of the sledding, lighted snowboard storefronts it owns to local ter-rairi, snoxxTniobiling tours and a children's mercli.~~~~,, i„ ul I,~ Company's profitable snowpark. The attraction was so popular that its commercial leasing business. capaciry has been more than doubled for the 1997-1998 season. The Company continLles to K V B A T V R TV8 is one of the most widely explore ways to offer fun, family oriented non-ski i~• viewed television channels in winter activities that enhance the guests' vacation the Vail Valley. The flagship experience. n w z program, Good Movning Tlail, earns higher ratings locally than C L u B M A tv a G E M E[v T For guests who iiational morning news and desire the highest-qualiry cntertainmenC shows. The service and the privileges of ~ tI.uinQ I i~ In Cllent advertising vehicle for the tnembership in a private club, Company and local businesses. g the Company has created and ~ ~ . • - tnanages the Beaver Creek R F: a i F. ,~r ar r~B R o x E R e G E Uail Resorts' Club, Game Creek Club and real estate brokerage operations the 1'assport Club at Golden Yeak. Amenities .ire conducted through joint range from private dining to private parking and . u• ventures, which have strong golf privileges. The Company earns ongoing inarket positions in the markets management fees for overseeing club operations. ~ they serve. These operations The Coinpany is planning similar club operations ~ 1iave also been a valuable source for Bachelor Gulch and Arrowhead homeowners ut111iurilia(i0ii i>> planning and marketiing the on Beaver Creek Mountain. Company's real estate projects. ~ g r 8 P REAL ESTATE DEVELOPMENT Vail Resorts has an active real estate development business, which supplements ongoing resort operations. The Company has extensive land holdings throughout Eagle and Summit Counties, surrounding its resorts, which are managed by Vail Resorts Development Company (VRDC), a wholly owned subsidiary responsible for planning, marketing, infrastructure design and construction. S u p p o r t i nA F u t u r e G r o w t h activiry. To minimize its risk, VRD C typically The focus of the Company's real estate contracts to sell development sites to development is to generate significant cash third-parry developers who undertake the flows while benefiting the Cornpany's resort construction and financial obligations of the operations through (i) the creation of residential units. Vail Resorts, in turn, receives ~additional lodging for resort guests, (ii) the an upfront cash payment for the land as well as ~ability to control the architectural theming of a share in the developer's profit. For example, ~ its resorts, (iii) the creation of new restaurants, the recent development of One Beaver Creek ~retail operations and skier service space in the and Market Square, which completed the core ~ base village of the Company's resorts that of Beaver Creek Village, were developed in ~ create new sources of recurring resort this rnanner. ~ revenue, (iv) the enhanceinent or addition Residential development projects also 'of on-mountain facilities and amenities, rypically include commercial development, 30 Which improve the vacation experience which enhances the qualiry and variery of offered at the Company's resorts, and (v) the shopping and dining available in the base expansion of the Company's properry villages of the Company's resorts. In most management and brokerage operations. developments, the Company retains the rights To facilitate real estate development, to the new retail or commercial space, which VRDC invests significant capital for may be either leased to third-party tenants or on-mountain improvements, such as ski lifts, operated by the Company itself. This strategy trails and snowmaking. These improvements has been very successful in the development enhance the value of the Company's real of Beaver Creek Village dining and shopping estate holdings while also improving the alternatives. qualiry of the overall ski and snowboard ~ ex erience offered to its uests. Followin 7 R E n ~ E s T n r~ p g ~i REAL ESTATE YEAR- END this strategy, VRDC invested significant !t i V r N e s B O O K V a L u F capital to develop the Bachelor Gulch ski dollars) terrain, including a high-speed quad chairlift. 1,14.9 This investment, which supported 12% skier so 71.7 160 visit growth in Beaver Creek this past year, ` 60 72- also allowed VRDC to contract to sell 101 ' ~ ~ ski-in/ski-out, single-family homesites 5' adjacent to the Bachelor Gulch ski terrain 0 for an average of $750,000 per homesite. 0 The majoriry of these homesite sales were , , closed in fiscal 1997. 5 4.6 In addition to selling single-family ~ 93 94 95 96* 97* 93 94 95 96* 47* homesites, VRDC also develops multi-family ' S1teS, lri 2ddltlOri t0 OtheT' T'eSOT't deVelOprilerit ' ProJorma ro mdude i,npacr of Krystnne arid Breckenridge acqursir;on. ~ ~ f - i B • uI i •in t o t e FUTURE At Vail Resorts, vve are eager to innovate in ways that attract more guests to our resorts and that enhance the quality of their vacations with us. At the same time, we take seriously our responsibilities to our employees, to our communities, and to the environment in which we operate. We have provided comprehensive benefits and affordable housing for our employees. We have enabled those in our communities to prosper along with us. And even as we have grown, Vail Resorts, along with the United State Forest Service, has been sensitive to the needs of environmental protection and conservation. As we focus on innovation in marketing, access, technology and eustomer service, we will continue to recognize the obligations we have to our employees, to those who call our communities home...and to the future generations who will someday experience the splendor and joy of the Calorado Rockies, which is at the heart of today's Vail Resorts experience. MARKETING, SALES AND PROMOTION To build upon our strong brand identity and increase demand for our resorts throughout the year, the Company has dedicated more than $20 million for marketing, sales and promotion in fisca11998. Primary vehicles to reach potential visitors are advertising in leading magazines, direct mail to past and potential guests, our new internet website and extensive public relations activity, all complemented by the industry's largest sales force. Our marketing efforts are designed to reinforce the image of a portfolio of resorts that individually possess a distinctive character and personality, and which together provide superior service, infrastructure and amenities as well as access to some of the finest skiing and snowboarding in the world. Guests incentives are also provided through Vail Resorts is an aggressive competitor in the new PEAKS at Vail Resorts frequent skier markets near and far. In Denver and the loyalry program. Modeled after an airline-sryle sttrrounding Colorado communities, for frequent flyer program, it awards guests points example, the Company launched in 1997 its for skiing, dining, lodging and private lessons most aggressive ever marketing effort to attract that can be redeemed for lift tickets and other local skiers. The Company has been equally 32 activities. Uail Resorts has also intensified aggressive across the nation and around the its direct marketing efforts to its extensive world, working with travel distributors in database ofpast customers. Last year, the marketing to consumers throughout the U.S., Company sent more than seven million pieces Canada and Mexico, as well as to the large of direct mail to past or potential guests. skiing populations in Europe and South America. Hostirag evenCS tlaat veceiveglobal news coverage is just ane of the activities thatgets Tlail Resorts teru nFnrillions of dollnrs nnrrually iri free pi4bliiiry. . 't~ a ~ , - • ~ :F r . , . ,~.a<+ x AOIZ The Coinpany expects to have huradreds of thousancls , of consiEmers with active PEAKS at Vail Resorts • membevs{zips by the end o,f the 1997-1998 ski season. tiI~ AIRPORT ACCESS The Company's resorts are easily accessible to national and international guests through two airports, Vail/Eagle County and Denver International (DIA). To make it even more convenient for destination guests, the Company has worked closely with major national airlines to significantly increase service at Uail/Eagle, which is located just 25 minutes from Beaver Creek and gives an enormous competitive advantage for Vail Resorts. As a result, the number of daily non-stop jet flights, primarily on 757 aircraft to and from major cities has grown substantially. Vail/Eagle County Airport offers non-stop jet service between the Vail Valley and New York LaGuardia, Newark, Washington, Atlanta, Miami, Chicago, Minneapolis, Detroit, Dallas/Fort Worth, Houston, Denver and Los Angeles. During the 1996-1997 ski season, approximately 42% of Vail and Beaver Creek destination guests arrived through Vail/Eagle, up from 9% in 1990. Total scheduled seats for the 1997-1998 ski season exceed the 300,000 mark, an increase of 14% over the previous season. The Company also benefits from DIA, G ao w-r Ei Irv SEnr C n Yn cIr Y nr the newest airport in the United States and V n 1 L/ E a c LE C O U N T Y A I R P O R T among the most modern in the world. Thanks seats) to parallel runways and state-of-the-art air ~ traffic control systems, delay rates at DIA are among the lowest in the United States - a 250 33 remarkable achievement for an airport in a , winter climate. With DIA serving as a major airline hub, 150 and with Uail/Eagle County Airport offering so much convenicnce, the Company believes its extensive airline access gives it a significant 0 competitive advantage over inost other North 90 91 92 93 94 95 96 97 98 American destination ski resorts. The 0 Company intends to continue to work with its airline partners to even further increase airline access to its resorts. r-~ - ~ ' 4 • ~ : f .~~iirriiitti, (.~~iilu~inl~l, U~'fi~, :Aui~liii•r,i iud 1 iin~~! ;i~i ~.iin~ I iil; l:r~lc (;~iini~.lu~>ar~ ~i ur~ ;unir%r. TECHNOLOGY Vail Resorts has long recognized the potential of information technology to enhance service levels and convenience. With that in mind, the Company has developed a comprehensive multi-year plan to expand and enhance its technological capabilities. With much of the plan complete for the 1997-1998 ski season, guests will benefit from the PEAKS at Vail Resorts loyalty program as well as from added conveniences such as the ability to bypass the ticket window and proceed directly to the ski lift by displaying photo identification linked to their credit cards. The Company is also providing guests the convenience of a"cashless" vacation, where guests can use their ski pass to pay for lunch, retail purchases, and ski and snowboard lessons. In addition, Vail Resorts' completely redesigned, interactive internet site allows guests to book their vacations and check up-to-the-minute satellite weather and snow conditions. These and other technological useful information to front-line personnel. It improvements provide significant benefits to is also a valuable tool for direct marketing and Vail Resorts as well. Bar code lift ticket promotional activities. To gain maximum scanning systems allow for fully benefit from its technology, the Company is 34 interchangeable lift tickets at the Company's integrating systems that existed at Breckenridge four resorts. The development of an and Keystone with those of Vail and Beaver integrated customer database tracking guest Creek. preferences and spending patterns provides 1 ~ I~ail Resort,s information systems allow its guests interchangeable lift tickets, freguent 0o skier program membership and a unigue ci~`t?FS vesort-wide charging privilege that allows _ Cot_o?tAnp ~ guests to bypass the ticket windows and enjoy the convenience of a cashless vacation. i .0 v ~ ~ PEOPLE AND SERVICES Our guests arrive at our resorts anticipating the thrill of skiing or snowboarding, the pleasure of a fine dinner, the chance to shop for unique items they cannot find back home, or simply the enjoyment of taking a stroll through our base villages. To make these vacation experiences possible, Vail Resorts maintains an uncompromising commitment to delivering the highest-quality service. That commitment has guided us for 35 years and has helped make our resorts synonymous throughout the world with quality. On the front lines delivering this service are our 8,000 employees, who consistently demonstrate how much they care about serving our guests. The commitment of our employees is While no service entiry can achieve evident throughout Vail Resorts' operations. perfection, we do strive to maintain an Representatives at central reservations help absolute passion for quality. At Vail Resorts, our guests plan their vacations. Ski patrol, lift we recognize that quality is measured in the operators and other on-mountain staff help details. That we are able to get so many of ensure the highest-qualiry ski and snowboard those details right is a testament to the experience. Ski School instructors help our professionalism, hard work and dedication of 35 guests improve their skills and confidence our people. on the slopes. Friendly, professional staff at our restaurants, stores and lodges enhance every visit. ~ ~ << j ~~,,s•, : ~~,,R„ . TMT1 ~ ~ • ~ S v • . ~ ~ ~ . { /i.- . ^ . . O ~~r~. ab•~+. e. » . m r % ) 1 /f$ . i ~~~:II~ AN A/ ~ C, )i! Ipu1, Vail Resorts' commitment to excellerice ingrooming is • x" unmatched. The Company's extensive snowcat fleet is the - largest of any U.S. ski company and providesguests with impeccablY Sroomed terrain each and everY daY. What linlu our employees and ouvXuests is a passion fov skiing and sriowboarding. • • Financial performance r i v e s FUTURE GROWTH . VAIL RESORTS, INC.'s commitment to innovation and excellence for its guests produced recordfinancial results in fiscal 1997, The Company is well positioned to build on this success in fiscal 1998. i I j Selected Consolidated Financial Data ~ The following table presents selected historical consolidated financial data of the Com an for the r' p y pe iods ~ indicated. The financial data for the years ended September 30, 1995, 1996 and 1997 are derived from the ~ consolidated financial statements of the Company, which have been audited by Arthur Andersen LLP, , independent accountants. The unaudited pro forma results of operations for the year ended September 30, 1997 assume that the acquisition of Breckenridge and Keystone mountain resorts ("the Acquired Resorts") and the Initial Public Offering ("IPO") occurred on October 1, 1996, rather than the actual January 3, 1997 I acquisition date and February 4, 1997 IPO date. These pro forma results are not necessarily indicative of the actual results of operations that would have been achieved nor are they necessarily indicative of future results of operations. The unaudited pro forma results of operations below exclude the results of Arapahoe Basin mountain resort, which the Company divested pursuant to a consent decree with the Department of Justice. The data presented below are in thousands except per share amounts. ~ Pro Forma Fiscal Year Ended Fiscal Year Ended September 30, September 30, 199712' 1995 1996 199711' (unaudited) Statement of Operations Data: Revenues: Resort $ 126,349 $ 140,288 $ 259,038 $ 291,203 Rea1 estate 16,526 48,655 71,485 71,737 Total revenues 142,875 188,943 330,523 362,940 Operating expenses: Resort 82,305 89,890 172,715 198,315 37 Rea1 estate 14,983 40,801 66,307 66,382 Corporate expense 6,701 12,698 4,663 4,663 Depreciation and amortization 17,968 18,148 34,044 38,935 Total operating expenses 121,957 161,537 277,729 308,295 Income from operations 20,918 27,406 52,794 54,645 Net income (after-tax) 3,282 4,735 19,698 23,619 Earnings per common share $ .16 $ .22 $ .64 $ .68 Other Data: Resort Resort Revenue $ 126,349 $ 140,288 $ 259,038 $ 291,203 Resort Cash Flow 44,044 50,398 86,323 92,888 Skier days 2,136 2,228 4,273 4,890 Resort Revenue/skier day $ 59.15 $ 62.97 $ 60.62 $ 59.55 Real estate Revenues from real estate sales $ 16,526 $ 48,655 $ 71,485 $ 71,737 Real estate operating profit 1,543 7,854 5,178 5,355 Real estate assets 54,858 84,055 154,925 154,925 Balance Sheet Data: Tota1 assets $ 429,628 $ 422,612 $ 855,949 $ 855,949 Long-term debt, including current maturities 191,313 144,750 265,062 265,062 Stockholders' equity 167,694 123,907 405,666 405,666 The statement of operations for the year ended September 30, 1997 indudes the results of the Acguired Resorts for the 270-day period from january 4, 1997 to September 30, 1997. /zl Pro forma fiscal 1997 results are presented excludinA a one-time, pre-tax, $2.2 million reorganization charge incurred during the third quarter of fiscal 9997. ; Management's Discussion and Analysis of Financial Condition ' and Results of Operations The following discussion and analysis of financial The Company has elected to change its fiscal condition and results of operations of the Company year end from September 30 to July 31. Accordingly, should be read in conjunction with the consolidated the Company's fiscal year 1998 will end on July 31, financial statements as of September 30, 1997 and 1998 and consist of ten months. The Company will 1996 and for the years ended September 30, 1997, file quarterly reports for fiscal 1998 for the interim 1996 and 1995, included in Item 8 to this Form periods ending January 31, 1998 and April 30, 1998. 10-K, which provide additional information regarding financial condition and operating results. Results of Operations This Management's Discussion and Analysis contains information regarding Resort Cash Flow. Fiscal Year Ended September 30, 1997 Resort Cash Flow is defined as revenue from resort ("fiscal 1997") Versus Fiscal Year Ended operations less resort operating expenses, excluding September 30, 1996 ("fiscal 1996") depreciation and amortization. Resort Cash Flow is not a term that has an established meaning under The actual results of fiscal 1997 versus the actual generally accepted accounting principles. The results of fiscal 1996 discussed below are not Company has included information concerning comparable due to the acquisition of the Acquired Resort Cash Flow because management believes Resorts by the Company on January 3, 1997. it is an indicative measure of a resort company's Accordingly, the usefulness of the comparisons operating performance and is generally used by presented below is limited as fiscal 1997 includes the investors to evaluate companies in the resort results of the Acquired Resorts since January 3, 38 industry. Resart Cash Flow does not purport to 1997 while fiscal 1996 does not include any results represent cash provided by operating activities and of the Acquired Resorts. Please see pro forma should not be considered in isolation or as a comparisons elsewhere in this Management's substitute for measures of performance prepared Discussion and Analysis. in accordance with generally accepted accounting principles. Furthermore, Resort Cash Flow is not R e s o r t R e v e n u e Resort Revenue for fiscal available for the discretionary use of management 1997 was $259.0 million, an increase of $118.8 and, prior to the payment of dividends, the million, or 84J%, compared to fiscal 1996. The Company uses Resort Cash Flow to meet its capital increase was attributable primarily to (i) the expenditure and debt service requirements. inclusion of the results of the Acquired Resorts from On January 3, 1997, the Company acquired the January 4, 1997 ($104.8 million) and (ii) increases Breckenridge, Keystone and Arapahoe Basin in lift ticket, ski school, food service, retail and mountain resorts as well as significant related real rental, hospitality and other revenues. estate interests and developable land. Pursuant to a consent decree with the United States Department R e s o r t O p e r a t i n g E x p e n s e s Operating of Justice, the Company divested the Arapahoe expenses from resort operations ("Resort Operating Basin Mountain Resort on September 5, 1997. (See Expenses") were $172.7 million for fiscal 1997, Note 3 to the consolidated financial statements.) representing an increase of $82.8 million, or 92.1%, as The Breckenridge and Keystone mountain resorts compared to fiscal 1996. The increase in Resort are referred to herein as the "Acquired Resorts" Operating Expenses is primarily attributable to The Company's business is seasonal. Historically (i) the indusion of the results of the Acquired Resorts the Company has generated the vast majority of from January 4, 1997 ($69.1 million), (ii) increased its revenues in the first and second quarters of each variable expenses resulting from the increased level of fiscal year. The Company typically has negative Vail/Beaver Creek Resort Revenue and skier days in Resort Cash Flow and reports losses for the third fiscal 1997, (iii) expenses associated with new and fourth quarters of each fiscal year. Vail/Beaver Creek food service and retail and rental ` operations and (iv) a one-time reorganizarion charge million as compared to fiscal 1996. For periods prior of $2.2 million in the third quarter of fiscal 1997. to fiscal 1997, corporate expense included the costs associated with the Company's holding company R e s o r t C a s h F l o w Resort Cash Flow for structure and overseeing multiple lines of business, fiscal 1997 was $863 million, an increase of $35.9 including the discontinued operations. In fiscal million, or 71.2%, compared to fiscal 1996. The 1997, corporate expense includes certain personnel, increase in Resort Cash Flow is due primarily to tax, legal, directors' and officers' insurance and other the inclusion of the results of the Acquired Resorts consulting fees relating solely to the Company's from January 4, 1997 ($35J million) and the resort and real estate operations. Corporate expense increased level of Vail/Beaver Creek Resort for fiscal 1996 includes the following nonrecurring Revenue, offset by increased expenses related to charges: (i) $2.1 million related to the termination new operations as described above. of an employment agreement with the Company's former Chairman and Chief Executive Officer, R e a I E s t a t e R e v e n u e s Revenues from (ii) $4.5 million related to payments to certain real estate operations far fiscal 1997 were $71.5 holders of employee stock options, and (iii) $1.9 million, an increase of $22.8 million, compared to million of compensation expense related to the fiscal 1996. Revenue for fiscal 1997 consists exercise of stock options by the Company's former primarily of the sales of 65 single family homesites Chairman and Chief Executive Of£icer. Excluding in the Bachelor Gulch Village development which the effect of those items, corporate expense totaled $47.5 million, two condominiums in the increased $0.4 million. Golden Peak base facility totaling $8.0 million, 39 various condominiums in Beaver Creek Village D e p r e c i a t i o n a n d A m o r t i z a t i o n totaling $4.2 million and Arrowhead Village land Depreciation and amortization expense was $34.0 sales of approximately $5.1 million. Revenue for million for fiscal 1997, an increase of $15.9 million, fiscal 1996 consisted primarily of the sales of 30 as compared to fiscal 1996. The increase was single family homesites in the Strawberry Park primarily attributable to the inclusion of the results development at Beaver Creek Resort which totaled of the Acquired Resorts from January 4, 1997 ($14.1 $30.9 million. million) and Uail/Beaver Creek capital expenditures made in fiscal 1996 and the first quarter of fiscal 1997. Real Estate Operating Expenses Real estate operating expenses f o r fiscal 1997 were $66.3 I n t e r e s t E x p e n s e During fiscal 1997 and million, an increase of $25.5 million, compared to fiscal 1996, the Company recorded interest expense fiscal 1996. Real estate cost of sales for fiscal 1997 of $20.3 million and $14.9 million, respectively, consists primarily of the cost of sales and real estate which relates primarily to the Company's Senior coirun.issions associated with the sale of 65 single Subordinated Notes, the Industrial Development family homesites in the Bachelor Gulch Village Bonds, and the Company's credit facilities. The development, two Golden Peak condominiums, increase in interest expense from fiscal 1996 to various condominiums in Beaver Creek Village and fiscal 1997, is attributable to the interest incurred on Arrowhead Village land sales. Real estate cost of the $165 nullion in debt assumed in the acquisition of sales for fiscal 1996 consisted primarily of the cost of the Acquired Resorts and the contractual redemption sales and real estate commissions associated with the premium incurred in the early redemption of the sale of 30 single family homesites in the Strawberry 12 %4% Senior Subordinated Notes due 2004, parrially Park development at Beaver Creek Resort. offset by interest reductions due to redemptions totaling $54.5 million in principal amount of Senior C o r p o r a t e E x p e n s e Corporate expense was Subordinated Notes in the first half of fiscal 1996. $4.7 million for fiscal 1997, a decrease of $8.0 See "Liquidity and Capital Resources" Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Fiscal 1996 Versus Year Ended September 30, Cash Flow as a percentage of Resort Revenue 1995 ("fiscal 1995") increased to 35.9% for fiscal 1996 as compared to 349% for fiscal 1995. The increase in Resort R e s o r t R e v e n u e Resort Revenue for fiscal Cash Flow is primarily due to the increase in skier 1996 was $140.3 million, an increase of $13.9 days and ETP as discussed above. million, or 11.0%, compared to fiscal 1995. The increase was attributable primarily to (i) an 8.4% R e a 1 E s t a t e R e v e n u e s Revenues from real increase in lift ticket revenue due to a 4.3% increase estate operations for fiscal 1996 were $48.7 million, in skier days (a 5.3% increase at Vail Mountain and an increase of $32.1 million, compared to fiscal a 1.5% increase at Beaver Creek Mountain) and an 1995. The increase is due primarily to the closings increase in effective ricket price (defined as total lift of sales of 30 single family lots in the Strawberry ticket revenue divided by total skier days) ("ETP") Park development at Beaver Creek Resort in from $29.96 to $31.12, or 3.9%, (ii) a 9.6% increase December 1995 and February 1996, which in ski school revenue due to increases in lesson generated $30.9 million in gross proceeds. prices and increases in lesson volume driven primarily by snowboarding and children's lessons, R e a 1 E s t a t e O p e r a t i n g E x p e n s e s Real (iii) a 9.8% increase in food service revenues due estate operating expenses for fiscal 1996 were $40.8 to price increases and the increase in skier days, million, an increase of $25.8 million, compared to (iv) a 19.1% increase in retail and rental revenues fiscal 1995. The increase resulted primarily ttom due to favorable changes in product mix, the growth the cost of sales and commissions associated with the 40 in popularity of snowboarding and new ski sale of the Strawberry Park lots which totaled technology, and the increase in skier days, and (v) a $24J million. 17.2% increase in hospitality revenues due primarily to enhanced marketing efforts for the Company's C o r p o r a t e E x p e n s e Corporate expense property management activities. was $12.7 million for fiscal 1996, an increase of $6.0 million as compared to fiscal 1995. Corporate R e s o r t O p e r a t i n g E x p e n s e s Operating expense far fiscal 1996 includes the following expenses from resart operations ("Resort Operating nonrecurring charges: (i) $2.1 million related to Expenses") were $89.9 million for fiscal 1996, the termination of an employment agreement representing an increase of $7.6 million, or 9.2%, as with the Company's former Chairman and Chief compared to fiscal 1995. As a percentage of Resort Executive Officer, (ii) $4.5 million related to Revenue, Resort Operating Expenses declined from payments to certain holders of employee stock 65.1% to 64.1% in fiscal 1996. The increase in options, and (iii) $1.9 million of compensation Resort Operating Expenses is primarily attributable expense related to the exercise of stock options to (i) increased variable expenses resulting from the by the Company's former Chairman and increased level of Resort Revenue and skier days in Chief Executive Officer. Excluding the effect fiscal 1996, (ii) a$1.6 million increase in the accrual of those items, corporate expense decreased for long term incentive compensation associated $2.5 million. This decrease was primarily due with the improvement in the operating results of to the inclusion in fiscal 1995, of $1.6 million the resorts segment during fiscal 1996, and (iii) a of compensation expense related to shares of $1.1 million increase in labor related expenses Common Stock granted to the Company's former due to expanded operations. Chief Executive Officer pursuant to an employment agreement dated October 8, 1992. Those shares R e c o r t C a s h F 1 o w Resort Cash Flow for were earned over the three year period beginning fiscal 1996 was $50.4 million, an increase of $6.4 on the date of the employment agreement and million, or 14.4%, compared to fiscal 1995. Resort ending on October 8, 1995. Accordingly, compensation expense was charged to corporate pension liability related to three founders of the expense ratably over that period. The remaining Company, (iii) a$600,000 increase in reserves decrease was attributable to reductions in payroll related to a change in the estimate of the Company's expense and other office expenses related to the obligation to a medical research foundation, and partial closure of the Company's Denver office as (iv) $373,000 in income related to a favorable of December 31, 1995. retrospective adjustment on a worker's compensation insurance policy of a former subsidiary of the D e p r e c i a t i o n a n d A m o r t i z a t i o n Company. The significant components of other Depreciation and amortization expense increased by income (expense) for fiscal 1995 are (i) a$1.2 $180,000 for fiscal 1996 over fiscal 1995, primarily million gain on the sale of securities, (ii) income due to capital expenditures made in fiscal 1995. of $687,000 related to the elimination of reserves for pre-petition bankruptcy claims and (iii) $1.6 I n t e r e s t E x p e n s e During fiscal 1996 and million in income related to a change in the fiscal 1995, the Company recorded interest expense estimate o£the Company's obligation to a medical of$14.9 million and $19.5 million, respectively, research foundation. which relates primarily to the Company's Senior Subordinated Notes, the Industrial Development Pro Forma Results of Operations - Bonds, and the Company's existing credit facilities. Fiscal 1997 Versus Fiscal 1996 The decrease in interest expense from fiscal 1995 * * * * to fiscal 1996, is attributable to the redemptions of The following unaudited pro forma results of $30 million and $24.5 million in principal amount operations of the Company for fiscal 1997 and 41 of Senior Subordinated Notes on December 11, fiscal 1996 assume that the Acquisition occurred 1995 and February 2, 1996, respectively, offset on October 1, 1995. The unaudited pro forma by call premiums paid in connection with those financial information below excludes the results of redemptions. See "Liquidity and Capital Resources." Arapahoe Basin mountain resort, which the Company divested on September 5, 1997. Resort Operating L o s s o n d i s p o s a 1 o f f i x e d a s s e t s The Expenses and Resort Cash Flow for the year ended loss on disposal of fixed assets for fiscal 1996 was September 30, 1997, include the effect of a one-rime $2.6 million compared to $849,000 for fiscal 1995. restructuring charge in the amount of $2.2 million The loss for fiscal 1996 consists primarily of a recorded in the third quarter of fiscal 1997. These $2.3 million loss on the retirement of the Lionshead unaudited pro forma results are not necessarily gondola and a$340,000 loss on the retirement of the indicative of the actual results of operations that would Golden Peak chairlift. Both lifts have been replaced have been achieved nor are they necessarily indicative with upgraded equipment. The loss for fiscal 1995 of future results of operations. Consists primarily of a$600,000 loss on the write off Years ended September 30, of hft equipment whiCh was replaCed during an In thousands (unaudited) 1997 1996 upgrade of a Uail Mountain chairlift. Resorc Revenue $ 291,203 $ 267,409 Resort Operating Expenses 200,515 182,581 Resort Cash Flow 90,688 84,828 Other income (expense) Thesignificant components of other income (expense) for fiscal 1996 are (i) a$725,000 increase in the reserves R e s o r t R e v e n u e Pro forma Resort Revenue related to the Company's indemniry to the for the year ended September 30, 1997 was $291.2 purchaser of a former subsidiary o£ the Company, million, an increase of $23.8 million, or 8.9%, (ii) a$690,000 increase in the estimate of the compared to the year ended September 30, 1996. , Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Revenue by category is as follows: R e s o r t O p e r a t i n g E x p e n s e s Pro Forma Years ended September 30, Resort Operating Expenses were $200.5 million for In thousands 1997 1996 the year ended September 30, 1997, compared to Lifr cickecs $ 135,884 $ 127,663 $182.6 million for the year ended September 30, Ski school 34,471 33,091 1996. Resort operating expenses as a percentage Food service 43,704 38,133 Recail and rencal 17,624 13,362 of Resort Revenue increased from 68.3% to 68.9% Hospitaliry 33,984 31,822 in the year ended September 30, 1997. The increase Ocher 25,536 23,338 in Resort Operating Expenses is attributable to Total revenue $ 291,203 $ 267,409 (i) increased variable expenses resulting from the increased level of Resort Revenue, (ii) expenses Lift ticket revenue increased due to an increase in associated with new food service and retail and rental effective ticket price from $27.49 to $27.79, or operations, (iii) increases in the operating expenses 1.1% and a 5.3% increase in skier days. The increase of the Acquired Resorts and (iv) a one-time in ETP is primarily due to increases in the lead reorganization charge of $2.2 million in the third ticket prices at each resort, offset by higher usage quarter of fiscal 1997. of discounted tickets targeted at skiers from the Denver/Colorado Springs area and an increase in R e s o r t C a s h F l o w Pro Forma Resort late season skier days which tend to have a lower Cash Flow was $90.7 million for the year ended ETP. The increase in skier days was due primarily September 30, 1997; compared to $84.8 million to (i) an increase in snowboarders at Keystone for the year ended September 30, 1996. Resort 42 Mountain as the 1996-97 ski season represented the Cash Flow as a percentage of Resort Revenue first time snowboarding had been permitted on decreased from 31.7% to 31.1% in the year ended Keystone Mountain and (ii) increases at Beaver September 30, 1997. The increase in Resort Cash Creek Mountain due in part to the 30% terrain Flow is due primarily to the increased level of expansion with the opening of Bachelor Gulch. Resart Revenue, offset by increased expenses related Ski school revenue increased 4.2% due primarily to new operations, a one-time reorganization charge to increases in the number of snowboarding lessons of $2.2 million and increases in the Acquired and children's lessons sold. Food service revenue Resorts' operating expenses as described above. increased 14.6% primarily as a result of the opening of six new operations, expansion of existing Liquidity and Capital Resources operations and price increases at Vail and Beaver * * * * Creek mountains. Retail and rental revenues The Company has historically provided funds for increased 31.9% due to the opening of nine new debt service, capital expenditures and acquisitions operations and the repositioning of existing through a combination of cash flow from operations to take advantage of current trends such operations, short term and long term borrowings as snowboarding, as well as greater product diversity and sales of real estate. throughout the Company's retail operations. The Company's cash flows from investing Hospitality revenue increased 6.8°/o primarily due activities have historically consisted of payments to (i) increases in property management revenue at for acquisitions, resort capital expenditures and Beaver Creek Resort attributable to increases in the investments in real estate. In fiscal 1997, cash used number of units under management and the average in investing activities of $251.8 million was daily revenue per unit and (ii) increases in lodging attributable primarily to cash paid for the Acquired revenue at Company ovvned and managed lodging Resorts, including direct costs and offset by cash facilities at Beaver Creek Resort and Keystone acquired, of $146.4 million, resort capital Resort attributable to price increases and higher expenditures of $51.0 million and investments in occupancy rates. real estate of $56.9 million. Resort capital expenditures for the year Breckenridge Mountain, (iii) expansion of the ended September 30, 1997 were $51.0 million. groorning fleets at Vail and Beaver Creek mountains, Investments in real estate for that period were $56.9 (iv) upgrades to the back office and front line million, which included $7.0 million of mountain information systems and (v) infrastructure for the improvements, including ski lifts and snowmaking Category III expansion on Vail Mountain. equipment, which are related to real estate Investments in real estate in fiscal 1998 are development but which will also benefit resort anticipated to be between $40.0 and $50.0 million. operations. The primary projects included in The primary projects are anticipated to include (i) resort capiCal expenditures were (i) the new continuing infrastructure related to Bachelor Gulch Lionshead gondola, (ii) The renovation and Village and Arrowhead Village, (ii) golf course expansion of the Eagles Nest facility and the development, (iii) investments in developable land at creation of Adventure Ridge and (iii) new strategic locations at the four ski resorts and (iv) retail, restaurant and skier service facilities in the investments in a joint venture to develop properry renovated Golden Peak base facility. The primary located at the base of Keystone Mountain. projects included in investments in real estate were The Company continues to pursue strategic (i) the completion of six luxury condominiums resort acquisition opportunities as well as located in the new Golden Peak base facility, opportunities to expand its presence in lodging, (ii) infrastructure related to the Bachelor Gulch properry management, retail, food service and real estate development, (rii) construcrion costs commercial leasing activities within its existing associated with Beaver Creek Village Center, resorts. See "Recent Developments." (iv) infrastructure related to Arrowhead Village, The Company generated cash from financing 43 (v) infrastructure related to the snowmaking reservoir activities of $151.0 nullion in fiscal 1997, consisting at Beaver Creek, Bachelor Gulch and Arrowhead of proceeds £rom the initial public offering, net villages and (vi) a new high speed quad chairlift at of direct costs, of $98.2 nullion, proceeds from Beaver Creek Resort. borrowings under long-term debt of $235.0 million, On January 3, 1997, the Company acquired the of£set by payments on long-term debt of $140.0 Breckenridge, Keystone and Arapahoe Basin million and payments under the Rights of $42.2 mountain resorts as well as significant related real million. estate interests and developable land. In connection At September 30, 1996, the Company had with this acquisition, the Company paid cash of $44.0 million in outstanding borrowings under its $139.7 million, assumed indebtedness of $59.8 former credit facilities. Through January 3, 1997, million and issued 7,554,406 shares of Common the Company borrowed an additional $26.0 nullion Stock valued at $151.1 nvllion to Ralston Foods, under those facilities. On January 3, 1997, in Inc. Direct expenses incurred in the transaction connection with the closing of the Acquisition, all approximated $9.0 million. Pursuant to a Consent amounts outstanding under the Company's former Decree with the United States Department of credit facilities were repaid with proceeds from the Justice, the Company was required to divest the Company's Credit Facilities. The Credit Facilities Arapahoe Basin mountain resort. On September 5, provide for debt financing up to an aggregate 1997, the Company sold the Arapahoe Basin principal amount of $340 million and consist of mountain resort for a sum of $4.0 million. (i) a$175 million Revolving Credit Facility, (ii) The Company estimates that it will make a$115 million Tranche A Term Loan Facility and resort capital expenditures totaling between $50.0 (iii) a$50 million Tranche B Term Loan Faciliry and $70.0 million in fiscal 1998. The primary (together with Tranche A, the "Term Loan projects are anticipated to include (i) trail and Facilities"). The Term Loan Facilities were used to infrastructure improvements at Keystone Mountain, refinance $139.7 nullion of the Acquisition purchase (ii) terrain and facilities improvements at price and the balanee of the Term Loan Facilities Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) was used to repay borrowings under the Company's only to the extent that it received proceeds under former credit facilities. The Revolving Credit certain real estate contracts outstanding at September Faciliry matures on April 15, 2003. The minimum 30, 1996. As of September 30, 1997, the Company amortization under the Term Loan Facilities is had received gross proceeds under the applicable $11.5 million, $14.0 million, $19.0 million, $21.5 contracts totaling $499 million and had made million, $26.5 million, $31.5 million and $41.0 payments under the Rights of $42.2 million. In million during the fiscal years ending September 30, addition, the Company's former Chairman and 1998, 1999, 2000, 2001, 2002, 2003 and 2004, Chief Executive Officer waived his right to receive respectively. The Company is also required to make approximately $2.7 million under the Rights in mandatory amortization payments under the Term exchange for the payment of the exercise price on Loan Facilities with excess cash flow (as defined in certain stock warrants that he held. On October 31, the Credit Agreement), proceeds from asset sales, 1997, the Company paid all remaining amounts due and proceeds from certain equiry and debt offerings. under the Rights. During the year ended September 30, 1997, the Based on current levels of operations and cash Company repaid credit facility borrowings totaling availability, the Company believes that it will be able $77.0 million. to satisfy its debt service and capital expenditure The Credit Facilities require that no more than requirements from cash flow from operations, and $125.0 million in aggregate be outstanding under borrowings under the Credit Facilities. the Revolving Credit Facility for a period of 30 The Company believes that inflation during the consecutive days during each fiscal year, such period past three years has had little effect on its results of 44 to include April 15. The proceeds of loans made operations and any impact on costs has been largely under the Revolving Credit Facility may be used to offset by increased pricing. fund the Company's working capital needs, capital The Company is currently in the process of expenditures and other general corporate purposes, evaluating its software and hardware for Year 2000 including the issuance of letters of credit. compliance. Although a final assessment has not The Company consummated its initial public been completed, the Company believes that the offering (the "Offering") on February 7, 1997. costs to be incurred will not be material to the The Company sold 5 million shares of common overall presentation of the consolidated financial stock in the Offering at a price of $22.00 per share. statements. Net proceeds to the Company after direct expenses The Company uses interest rate swaps to modify of the Offering totaled $98.2 million. The its exposure to interest rate movements and reduce Company used $68.6 million of the proceeds to its borrowing costs. The company enters into interest redeem all of the Senior Subordinated Notes, rate swap agreements for certain of its floating rate including a contractual early redemption premium borrowings outstanding under its Term Credit of 4% and accrued interest up to the redemption Facilities. The Company's Term Credit Facilities and date of March 10, 1997. The Company used the the Revolving Credit facility are indexed to LIBOR. remainder of the proceeds for general corporate The Company utilizes a sensitivity analysis technique purposes. The Company was not required to use to evaluate the effect that changes in LIBOR will any of the proceeds from the Offering to make have on the Company's borrowings that are indexed payments under the Term Loan Facilities. to that rate. At September 30, 1997, the borrowings On September 25, 1996, the Company declared that were not subject to interest rate swap a right to receive up to $2.44 per share of Common agreements totaled $127 million. Based on the Stock to all stockholders of record on October 11, average floating rating borrowings outstanding 1996, with a maximum aggregate amount payable throughout fiscal 1997, a 100 basis point change under the Rights of $50.5 inillion. The Company in LIBOR, would cause the Company's monthly was obligated to make payments under the Rights interest expense to change by $111,000. The Company believes that this amount is not significant In December 1997, the Company received a to the earnings of the Company. comrrtitment from its lender, as agent, to amend the Credit Facilities (the "Amended Credit Facilities"). Recent Developments The Amended Credit Facilities will provide for an * * * * increase in debt financing from $340 million to an On October 1, 1997, the Company purchased the aggregate principal amount of $450 million in the assets constituting the Breckenridge Hilton for a Revolving Credit Facility that will mature on total purchase price of $18.6 nullion. The purchase December 19, 2002. Interest on outstanding price includes a cash paymenC of $18.1 million, advances under the Amended Credit Facilities is $0.2 million in assumed liabilities and $0.3 million payable at rates based upon either LIBOR plus a to provide for contingent consideration that may margin ranging from .50% to 1.25% or prime plus a be paid pursuant to the purchase agreement. The margin of up to .125%. Breckenridge Hilton is a 208-room full service hotel, located at the base of Breckenridge Mountain, and includes dining, conference and fitness facilities. The acquisition was accounted for as a purchase combination. On October 7, 1997, the Company purchased 100% of the outstanding stock of Lodge Properties, Inc., a Colorado corporation ("LPP'), for a total purchase price of $30.2 million. LPI owns and 45 operates The Lodge at Vail (the "Lodge"), a 59-room hotel located in Vail, Colorado, and provides management services to an additional 40 condominiums. The Lodge includes restaurant and conference facilities as well as other amenities. In addition to the hotel property, LPI owns a parcel of developable land strategically located at the primary base area of Vail Mountain. In addition to the cash purchase price, the Company expects to incur approximately $9.2 million to complete a new wing of the hotel which is currently under construction. The acquisition was accounted for as a purchase combination. The Company funded the above acquisitions with proceeds from its Revolving Credit Facilities. On October 10, 1997, the Company borrowed an additional $32 million under a new line of credit with its Credit Facility provider ("the Line of Credit"), the proceeds of which were used to reduce the Revolving Credit Facility balance. Borrowings under the Line of Credit bear interest annually at the Company's option at the rate of LIBOR (5.7% at September 30, 1997) plus a margin ranging from 0.5% to 125% ar prime plus a margin of up to 0.125%. Consolidated Balance Sheets Years ended September 30, In thousands, except share and per share amounts 1997 1996 Assets Current assets: Cash and cash equivalents $ 8,142 $ 5,622 Restricted cash 6,561 7,090 Receivables 17,638 4,660 Notes receivable 4,469 - Inventories 10,789 4,639 Deferred income taxes (Note 7) 24,500 17,200 Other current assets 4,253 5,490 Total current assets 76,352 44,701 Property, plant, and equipment, net (Note 5) 411,117 197,279 Real estate held for sale 154,925 84,055 Deferred charges and other assets 12,217 5,940 Notes receivable, noncurrent portion 1,073 5,581 Intangible assets, net (Note 5) 200,265 85,056 Total assets $ 855,949 $ 422,612 Liabilities and Stockholders' Equity Current liabilities: 46 Accounts payable and accrued expenses (Note 5) $ 70,171 $ 48,096 Income taxes payable 325 325 Rights payable to stockholders (Note 9) 5,707 50,513 Long-term debt due within one year (Note 4) 1,715 63 Total current liabilities 77,918 98,997 Long-term debt (Note 4) 263,347 144,687 Other long-term liabilities 23,281 15,521 Deferred income taxes (Note 7) 85,737 39,500 Commitments and contingencies (Note 9) Stockholders' equity (Notes 1 and 12): Preferred stock, $.01 par value 25,000,000 shares authorized, no shares issued and outstanding - - Common stock- Class A common stock, $.01 par value, 20,000,000 shares authorized, 11,639,834 and 12,426,220 shares issued and outstanding as of September 30, 1997 and 1996, respectively 116 124 Common Stock, $.01 par value, 80,000,000 shares authorized, 21,765,815 and 7,573,780 shares issued and outstanding as of September 30, 1997 and 1996, respectively 218 76 Additional paid-in capital 385,634 123,707 Retained earnings 19,698 - Total stockholders' equity 405,666 123,907 Total liabilities and stockholders' equity $ 855,949 $ 422,612 The accompanying notes to consolidated financial statements are an integral part of these balance sheets. ~ Consolidated Statement of Operations Years ended September 30, In thousands, except share and per share amounts 1997 1996 1995 Net revenues: Resort $ 259,038 $ 140,288 $ 126,349 Real estate 71,485 48,655 16,526 Total net revenues 330,523 188,943 142,875 Operating expenses: Resort 172,715 89,890 82,305 Real estate 66,307 40,801 14,983 Corporate expense 4,663 12,698 6,701 Depreciation and amortization 34,044 18,148 17,968 Total operating expenses 277,729 161,537 121,957 Income from operations 52,794 27,406 20,918 Other income (expense): Investment income 1,762 586 3,295 Interest expense (20,308) (14,904) (19,498) Loss on disposal of fixed assets (182) (2,630) (849) Other income (expense) (383) (1,500) 3,291 Income before income taxes 33,683 8,958 7,157 Provision for income taxes (Note 7) (13,985) (4,223) (3,875) Net income 19,698 4,735 3,282 47 Earnings per common share (Note 2): Net income $ .64 $ .22 $ .16 Weighted average shares outstanding 30,979,448 21,455,352 20,582,776 The accompanying notes to consolidated financial statements are an integral part of these statemenu. Consolidated Statement of Stockholders' Equiry Common Stock Additional Retained Total In thousands, Shares Paid-in Earnings Stockholders' except share amounts Class A Common Total Amount Capital (Deficit) Equity Balance, September 30, 1994 14,249,414 5,273,936 19,523,350 $ 196 $ 133,645 $ 28,653 $ 162,494 Net income for the year ended September 30, 1995 - - - - - 3,282 3,282 Shares issued pursuant to stock grants (Note 11) - 238,326 238,326 2 1,916 - 1,918 Shares of Class A Common Stock converted to Common Stock (Note 12) (1,431,722) 1,431,722 - - - - - Balance, September 30, 1995 12,817,692 6,943,984 19,761,676 198 133,561 31,935 167,694 Net income for the year ended September 30, 1996 - - - - - 4,735 4,735 Shares issued pursuant to stock grants (Note 11) - 238,324 238,324 2 1,989 - 1,991 Rights payable to stockholders - - - - (13,843) (36,670) (50,513) Shares of Class A Common Stock converted to Common Stock (Note 12) (391,472) 391,472 - - - - - Balance, September 30, 1996 12,426,220 7,573,780 20,000,000 200 123,707 - 123,907 48 Net income for the year ended September 30, 1997 - - - - - 19,698 19,698 Issuance of shares pursuant to options exercised (Note 11) - 744,482 744,482 7 10,212 - 10,219 Issuance of shares in acquisition of resort, net (Note 3) - 7,554,406 7,554,406 76 151,012 - 151,088 Issuance of shares in initial public offering, net (Note 1) - 5,000,000 5,000,000 50 98,100 - 98,150 Issuance of shares in acquisition of retail space, net - 106,761 106,761 1 2,348 - 2,349 Compensation expense related to employee stock options - - - - 255 - 255 Shares of Class A Common Stock converted to Common Stock (Note 12) (786,386) 786,386 - - - - - Balance, September 30, 1997 11,639,834 21,765,815 33,405,649 $ 334 $ 385,634 $ 19,698 $ 405,666 The auompanying notes to consolidated financial statements are an integral part of these statements. Consolidated Statement of Cash Flows Years ended September 30, In thousands 1997 1996 1995 Cash flows from operating activities: Net income $ 19,698 $ 4,735 $ 3,282 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 34,044 18,148 17,968 Deferred compensation payments in excess of expense (331) (814) (1,325) Noncash cost of real estate sales 52,647 32,394 9,208 Noncash compensation related to stock grants (Note 11) 306 25 1,633 Noncash compensation related to stock options 255 1,915 - Noncash equity income (701) - - Deferred financing costs amortized 389 247 237 Loss on disposal of fixed assets 182 2,630 849 Deferred real estate revenue - - 1,500 Deferred income taxes, net (Note 7) 7,413 2,500 2,900 Changes in assets and liabilities: Restricted cash 529 (575) (3,738) Accounts receivable, net 2,089 475 (349) Notes receivable, net (4,469) - - Inventories (835) (418) (1,236) Accounts payable and accrued expenses (10,712) 9,551 10,141 Other assets and liabilities 2,867 (4,947) (3,704) Net cash provided by operating activities 103,371 65,866 37,366 49 Cash flows from investing activities: Cash paid in resort acquisition, net of cash acquired (146,386) - - Resort capital expenditures (51,020) (13,912) (20,320) Investments in real estate (56,947) (40,604) (22,477) Investment in joint venture 2,511 (200) (400) Other - - 953 Net cash used in investing activities (251,842) (54,716) (42,244) Cash flows from financing activities: Proceeds from initial public offering 98,150 - - Payments under Rights (42,175) - - Proceeds from borrowings under long-term debt 235,000 84,000 253,400 Payments on long-term debt (139,984) (130,547) (287,741) Net cash provided by (used in) financing activities 150,991 (46,547) (34,341) Net increase (decrease) in cash and cash equivalents 2,520 (35,397) (39,219) Cash and cash equivalents: Beginning of period 5,622 41,019 80,238 End ofperiod $ 8,142 $ 5,622 $ 41,019 Cash paid for interest $ 20,166 $ 21,880 $ 13,852 Cash paid for income taxes 1,925 400 400 Supplemental disclosure of non-cash transactions: Issuance of common stock in resort acquisition (Note 3) $ 151,088 Assumption of liabilities in resort acquisition (Note 3) $ 91,480 Option exercise (Note 11) $ 2,740 Issuance of common stock in purchase of retail space $ 2,349 The aaompanying notes to consolidated financial statements are an integral part of these statements. ~ Notes to Consolidated Financial Statements Note 1. Basis of Presentarion Note 2. Summary of Significant Accounting * * * * Policies Vail Resorts, Inc. ("Vail Resorts"), is organized as a holding company and operates through various P r i n c i p 1 e s o f C o n s o 1 i d a t i o n The subsidiaries. Uail Resorts and its subsidiaries accompanying consolidated financial statements (collectively, the "Company") currently operate in include the accounts of the Company and its wholly two business segments, ski resorts and real estate owned subsidiaries. Investments in joint ventures , development. Vail Associates, Inc., a wholly-owned are accounted for under the equiry method. All subsidiary of Vail Resorts, and its subsidiaries significant intercompany transactions have been (collectively, "Vail Associates") operates one of the eliminated. Results of the operations acquired in world's largest skiing facilities on Vail Mountain and the Acquisition have been included in the fiscal Beaver Creek Mountain in Colorado. On January 3, 1997 consolidated statement of operations from 1997, Vail Associates acquired the Breckenridge, January 4, 1997 through September 30, 1997, Keystone and Arapahoe Basin mountain resorts (the except that results of operations for the Arapahoe "Acquired Resorts") and significant related real Basin mountain resort for the period of the estate interests and developable land (the Company's ownership have been excluded. "Acquisition"). The Company has since divested the (See pro forma financial information in Note 3.) Arapahoe Basin mountain resort pursuant to the Cash and Cash Equivalents The Consent Decree with the Department of Justice (see Company considers all highly liquid debt Note 3). The ski resorts are operated on United instruments with an original maturity of three 50 States Forest Service land under Term Special Use months or less to be cash equivalents. Permits expiring in 2031 for Vail Mountain, 2006 f o r Beaver Creek Mountain, 2029 f o r Breckenridge R e s t r i c t e d C a s h Restricted cash represents Mountain and 2032 for Keystone Mountain. Vail amounts held as reserves for self-insured worker's Resorts Development Company ("VRDC") is a compensation claims, and owner and guest advance wholly-owned subsidiary of Vail Associates, Inc. and deposits held in escrow for lodging reservations. conducts the Company's real estate development I n v e n t o r i e s The Company's inventories consist activities. The Company's mountain resort business primarily of purchased retail goods, food, and spare is seasonal with a typical ski season beginning in parts. Inventories are stated at the lower of cost, mid-October and continuing through mid-May. determined using the first-in, first-out (FIFO) In January 1997, the Company declared a 2 method, or market. for 1 stock split on its Class A Common Stock and Common Stock. All share and per share amounts in P r o p e r t y, P 1 a n t a n d E q u i p m e n t the accompanying consolidated financial statements Property, plant and equipment is carried at cost net have been adjusted to reflect this stock split. of accumulated depreciation. Depreciation is The Company consummated an offering of calculated generally on the straight-line method Common Stock (the "Of£ering") on February 7, based on the following useful lives: 1997. The Company sold 5 million shares of Years Common Stock in the Offering at a price of $22.00 Land improvements 40 per share. Net proceeds to the Company after Buildings and terminals 40 Ski lifts 15 expenses of the Offering totaled $98.2 million. MachinerY e4uiPment, furniture and fixtures 3-12 Certain selling shareholders sold an additional 7.1 Automobiles and crucks 3-5 million shares in the Offering. The Company did not receive any of the proceeds from the sale of Ski trails are depreciated over the life of their those shares. respective forest service permits. R e a l E s t a t e H e l d f o r S a 1 e The interest expense. Any premium paid is amortized Company capitalizes as land held for sale the over the life of the agreement. original acquisition cost (or appraised value as of the Effective Date, as defined below), direct I n t a n g i b 1 e A s s e t s "Reorganization Value in construction and development costs, properry taxes, Excess of Amounts Allocable to Identifiable Assets" interest incurred on costs related to land under ("Excess Rearganization Value") represents the development, and other related costs (engineering, excess of the Company's reorganization value over surveying, landscaping, etc.) until the property the amounts allocated to the net tangible and other reaches its intended use. The cost of sales for intangible assets of the Company upon emergence individual parcels of real estate or condominium from bankruptcy on October 8, 1992 (the "Effective units within a project is determined using the Date"). The company has classified as goodwill the relative sales value method. Selling expenses are cost in excess of fair value of the net assets of charged against income in the period incurred. companies acquired in purchase transactions. Interest capitalized on real estate development Intangible assets are recorded net of accumulated projects during fiscal years 1997, 1996 and 1995 amortization in the accompanying consolidated totaled $0.5 million, $2.2 million and $1.4 million, balance sheet and amortized using the straight-line respectively. method over their estimated useful lives as follows: The Company is a partner in the Keystone/ Intrawest L.L.C. ("Keystone JV"), which is a joint Excess Reorganization Value 20 years venture with Intrawest Resorts, Inc. formed to Goodwill 40 years Tradearks 40 years develop land at the base of Keystone Mountain. S 1 The Company contributed 500 acres of Other intangibles 3-15 years development land as well as certain other funds to L o ng - 1 i v e d A s s e t s The Company evaluates the joint venture. The Company's investment in potential impairment of long-lived assets and long- the Keystone JV including the Company's equity lived assets to be disposed of in accordance with earnings from the inception of the Keystone JV, Statement of Financial Accounting Standards No. are reported as real estate held for sale in the 121, "Accounting for the Impairment of Long- accompanying balance sheet as of September 30, 1997. Lived Assets and for Long-Lived Assets to be Disposed Of" ("SFAS No. 121"). SFAS No. 121 D e f e r r e d F i n a n c i n g C o s t s Costs establishes procedures for review of recoverability, incurred with the issuance of debt securities are and measurement of impairment if necessary, of included in deferred charges and other assets, net long-lived assets, goodwill and certain identifiable of accumulated amortization. Amortization is intangibles held and used by an entity. SFAS Na charged to income over the respective original lives 121 requires that those assets be reviewed for of the applicable debt issues and is included in impairment whenever events or changes in interest expense. circumstances indicate that the carrying amount of an asset may not be fully recoverable. SFAS No. 121 I n t e r e s t R a t e Ag r e e m e n t s Interest rate also requires that long-lived assets and certain exchange agreements, defined as swaps and caps identifiable intangibles to be disposed of be reported and floars, are effective at creating synthetic at the lower of carrying amount ar fair value less instruments and thereby modifying the Company's estimated selling costs. As of September 30, 1997, interest rate exposures. The Company enters into management believes that there has not been any interest rate exchange agreements to create synthetic impairment of the Company's long-lived assets, instruments. Net interest is accrued as either interest goodwill or other identifiable intangibles. receivable or payable with the offset recorded in ~ _u Notes to Consolidated Financial Statements (continued) R e v e n u e R e c og n i t i o n Resort Revenues are in the second quarter of fiscal 1998. When adopted, derived from a wide variery of sources, including SFAS No. 128 will replace the presentation of sales of lift tickets, ski school tuition, food service, primary earnings per share (EPS) with basic EPS. retail stores, equipment rental, travel reservation Basic EPS excludes dilution and is computed by services, lodging, property and club management, dividing net income available for common real estate brokerage, conventions, licensing and stockholders by the weighted average number of sponsoring activities and other recreational activities, common shares outstanding for the period. Diluted and are recognized as services are performed. EPS, which reflects the potential dilution that Revenues from real estate sales are not recognized could occur if securities or other contracts to issue until title has been transferred and revenue is common stock were exercised or converted, will deferred if the receivable is subject to subordination also need to be disclosed. until such time as all costs have been recovered. Until the initial down payment and subsequent F a i r V a 1 u e o f F i n a n c i a 1 I n s t r u m e n t s collection of principal and interest are by contract The recorded amounts for cash and cash equivalents, substantial, cash received from the buyer is reported receivables, other current assets, and accounts as a deposit on the contract. payable and accrued expenses approximate fair value due to the short-term nature of these financial A d v e r t i s i n g C o s t s Advertising costs are instruments. The fair value of amounts outstanding expensed the first time the advertising takes place. under the Company's Credit Facilities approximates Advertising expense for the years ended September book value due to the variable nature of the interest 52 30, 1997, 1996 and 1995 was $8.8 million, $6.9 rate associated with that debt. The fair values of million and $6.3 million, respectively. At September the Company's Industrial Development Bonds have 30, 1997 and 1996, advertising costs of $1.3 million been estimated using discounted cash flow analyses and $1.7 million are reported as current assets in the based on current borrowing rates for debt with Company's consolidated balance sheet. similar maturities and ratings. The estimated fair values of the Senior I n c o m e Ta x e s The Company uses the liability Subordinated Notes and Industrial Development method of accounting for income taxes as prescribed Bonds at September 30, 1997 and 1996 are by Statement of Financial Accounting Standards presented below (in thousands): ("SFAS") No. 109, "Accounting for Income Taxes." Sepcember 30, Under SFAS No. 109, a deferred tax liability or asset 1997 1996 is recognized for the effect of temporary differences Carrying Fair Carrying Fair between financial reporting and income tax Value Value Ualae Value reporting. Senior Subordinated Notes - - $ 62,647 $ 76,369 IndusCrial Development E a r n i ng s P e r S h a r e Earnings per common Bonds $ 61,263 $ 65,910 $ 37,903 $ 43,701 share is based on the weighted average number of shares outstanding during the period after consideration of the dilutive effect of stock grants, Us e o f E s t i m a t e s The preparation of warrants and options (see Note 11). financial statements in conformity with generally In February 1997, the Financial Accounting accepted accounting principles requires management Standards Board issued SFAS No. 128, "Earnings to make estimates and assumptions that affect the Per Share", which will be effective for the Company reported amounts of assets and liabilities, the ~ disclosure of contingent assets and liabilities at the liabilities at the date of the acquisition as follows balance sheet date and the reported amounts of (in thousands): revenues and expenses during the reporting period. Fair Value of Actual results could differ from those estimates. Nec Assets Acquired Cash $ 2,321 Accountsreceivable 15,067 S t o c k C o m p e n s a t i o n The Company's stock Inventory 5,315 option plans are accounted for in accordance with Property, plant and equipmenc, nec 180,663 Accounting Principles Board Opinion No. 25, Real escace held for sale 59,466 "Accounting for Stock Issued to Employees." The Incangible assets 6,984 Company has adopted disclosure requirements of Goodwill 118,469 Other assets 542 Statement of Financial Accounting Standards No. 123, ("SFAS 123"), "Accounting for Stock-Based Total assecs 388,827 Compensation" (Note 11 Accounts payable and accrued expenses 32,456 Other liabilities 2,040 Debt assumed 25,296 R e c 1 a s s i f i c a t i o n s Certain reclassifications Deferred income caxes 31,688 have been made to the accompanying consolidated Tocal liabffities 91,480 financial statements for the years ended September Tocal net assecs acquired $ 297,347 30, 1996 and 1995 to conform to the current period presentation. The following unaudited pro forma results of operations of the Company for the years ended Note 3. Acquisitions September 30, 1997 and 1996, assume that the 53 * * * * Acquisition occurred on October 1, 1995. The pro On January 3, 1997, the Company acquired from forma results of operations include the effects of the Ralston Foods, Inc. 100% of the stock of Ralston Company's initial public offering only from the Resorts, Inc. ("Ralston Resorts"), the owner effective date of the Offering. These pro forma and operator of the Breckenridge, Keystone and results are not necessarily indicative of the actual Arapahoe Basin mountain resorts located in results of operations that would have been achieved Summit County, Colorado, for a total purchase nor are they necessarily indicative of future results of price, including direct costs, of $297.3 million. operations. The unaudited pro forma financial In connection with the Acquisition, the Company infarmation below excludes the results of Arapahoe refinanced $139.7 million o£indebtedness, issued Basin mountain resort, which the Company 7,554,406 shares of Common Stock valued at divested pursuant to the Consent Decree. $151.1 million to Ralston Foods, Inc., assumed Years ended September 30, liabilities of $59.8 million and incurred $9.0 million In chousands, except per share amounts 1997 1996 in acquisition costs. Pursuant to a consent decree (unaudited) with the United States Department of Justice and Resort revenue $ 291,203 $ 267,409 the Attorney General of the State of Colorado (the Real estace revenue 71,737 49,831 Total revenues 362,940 317,240 "Consent Decree"), the Company sold the assets Net income 17,822 8,505 constituting the Arapahoe Basin mountain resort Nec income per common share 0.54 0.29 on September 5, 1997 for a sum of $4.0 million. The Acquisition was accounted for as a purchase combination. The purchase price was allocated to the fair values of Ralston Resorts' assets and ~ - : . -._..r1 Notes to Consolidated Financial Statements (continued) Noce 4. Long-Term Debt million of debt assumed in the Acquisition and the balance of * * * * the Term Loan Facilities was used to repay borrowings under Long-term debt as of September 30, 1997 and 1996 the Company s former credic facilities. The proceeds of the loans is summarized as follows made under the Revolving Credit Facility may be used to fund (in thousands): the Company's working capital needs, capital expenditures and othergeneral corporate purposes, including the issuance of letters Years ended September 30, of credit. 1997 1996 The Revolving Credit Facility matures on April 15, 2003. Senior Subordinated Notes(a~ $ 62,647 The minimum amortization under the Term Loan Facilities is Industrial Development Bonds~b) 61,263 37,903 $11.5 million, $14.0 million, $19.0 million, $21.5 million, Credit Facilities(`) 202,000 44,000 $26.5 million, $31.5 million, and $41 million during the Other(d) 1,799 200 fiscal years 1998, 1999, 2000, 2001, 2002, 2003, Qnd 265,062 144,750 2004, respectively. The Conlpany is also required to make Less-current maturities 1,715 63 mandatory amortization payments under the Term Loan $ 263,347 $ 144,687 Facilities with excess cash flow, proceeds from asset sales and proreeds from equity and debt offerings. (a) The Senior Subordinated Notes bore interest at 12 %a% The Credit Facilities reguire that no more than S 125.0 and had an original maturity date ofJune 30, 2002. On million in the aggregate be outstanding under the Revolving March 10, 1997, the Company redeemed all of the Senior Credit Facility for a period of 30 consecutive days during each Subordinated Notes with proceeds from the Offering. In fiscal year, such period to include April 15. connection with the redemption, the Company paid a Barrowings under the Credit Facilities bear interest annually contractual early redemption premium of 4% of the balance at the Company s option at the rate of (i) LIBOR (5.7% at redeemed, which is induded in interest expense for the year September 30, 1997) plus a margin (ranging from .50% to ended September 30, 1997. 1.75% in the case of Tranche A and the Revolving Credit 54 (b) The Company has $41.2 million of outstanding Industrial Facility and 2.25% in the case of Tranche B) or (ii) the Base Development Bonds issued by Eagle County, Colorado which Rate (defined as, generally, the higher of the Federal Funds accrue interest at 8% per annum and mature on August 1, Rate, as published by the Federal Reserve Bank of New York, 2009. Interest is payable semi-annually on February 1 and plus 0.5%, or the Agent's prime lending rate, which was August 1. The Company has provided the holder of these 8.50% at September 30, 1997) plus a margin up to .375%. bonds a debt service reserve fund of $3.3 million, which has In addition, the Company must pay a fee on the face amount been netted against the principal amount for financial reporting of each letter of credit outstanding at a rate ranging from .625% purposes. The Industrial Development Bonds are secured by to 1.875%. The Company must also pay a quarterly unused the stock of the subsidiaries of Vail Associates and the United commitment fee ranging frorn .20% to .50%. The interest States Forest Service permits. In connection with the Acquisition, margins and fees described in this paragraph fiuctuate based upon the Company assumed two series ojrefunding bonds. The the ratio of Funded Debt to the Company's Resort EBITDA Series 1990 Sports Facilities Refunding Revenue Bonds have (as defined in the Credit Agreement). an aggregate principal amount of $20.4 million, bear interest at rates ranging from 7.2% to 7.875% and mature installments (d) Other obligations bear interest at rates ranging from 6.5% to in 1998, 2006 and 2008. The Series 1991 Sports Facilities 7• 5% and have maturities ranging from 1999 and 2002. Refunding Revenue Bonds have an aggregate principal amount Aggregate maturities for debt outstanding are as of $3 million and bear interest at 7.125% for bonds maturing in 2002 and 7.375%for bonds maturing in 2090. follows (in thousands~: (c) OnJanuary 3, 1997, in connection with the dosing of the As of September 30, 1997 AcquisiNon, all amounts outstanding under the Company's Due during year ending September 30: former credit facilities were repaid with proceeds from new credit 1998 $ 1,715 facilities (the "CrediC Facilities"). The Credit Facilities provide 1999 374 for debt financing up to an agQregate principal amount of $340 2000 342 million and consist of (i) a$175 million Revolving Credit 2001 353 Facility, (ii) a$115 million Tranche A Term Loan Facility and 2002 1,875 (iii) a$50 million Tranche B Term Loan Facility (toAether with Thereafter 260,403 Tranche A, the "Term Z.oan Facilities"). The Term I.oan Total debt $ 265,062 Farilities were used to refinance $139.7 million o.f the $165 . Note 5. Supplementary Balance Sheet Note 6. Retirement and Profit Sharing Plans Information * * * * The Company maintains a defined contribution The composition of property, plant and equipment retirement plan, qualified under Section 401(k) follows: of the Internal Revenue Code, for its employees. Years ended Sepcembet 30, Employees are eligible to participate in the plan In chousands 1997 1996 upon attaining the age of 21 and completing one Land and land improvements $ 95,124 $ 66,966 ye2r of employment wlth a minlmum of 1,000 Buildings and terminals 152,171 60,928 hours of service. Participants may contribute from Machinery and equipment 146,741 68,286 Aucomobiles and trucks 14,958 3,729 2% to 15% of their qualifying annual compensation Furnicure and fixcures 28,282 12,817 up to the annual maximum specified by the Conscruction in progress 33,691 19,728 Internal Revenue Code. The Company matches 470,967 232,454 an amount equal to 50% of each participant's Accumulated depreciacion contribution up to 6% of a participant's annual and amortizacion (59,850) (35,175) qualifying compensation. The Company's matching $ 411,117 $ 197,279 contribution is entirely discretionary and may be reduced or eliminated at any time. Depreciation expense for fiscal years 1997, 1996 Total profit sharing plan expense recognized and 1995 totaled $25.1 million, $11.4 million and by the Company for the years ended September 30, $11.3 million, respectively. 1997, 1996 and 1995 was $731,000, $594,000 and $493,000, respectively. SS The composition of intangible assets follows: Note 7. Income Taxes Years ended September 30, * * * * In chousands 1997 1996 At September 30, 1997, the Company has total Trademarks $ 42,611 $ 41,096 federal net operating loss (NOL) carryovers of Other intangible assets 38,244 32,639 Goodwill 118,469 - approximately $336.0 million for income tax Excess Reorganization Value (Note 2) 37,702 37,702 purposes that expire in the years 2003 through $ 237,026 $ 111,437 2008, $40.0 million of which are not subject to Accumulaced amorcization (36,761) (26,381) any limitation under Section 382 of the Internal $ 200,265 $ 85,056 Revenue Code. The Company will be able to use NOLs which existed on October 8, 1992 (Effective Amortization expense for fiscal years 1997, 1996 Date NOLs) to the extent of approximately $8.0 and 1995 totaled $8.9 million, $6.8 million and million per year through October 8, 2007. In $6.7 million, respectively. addition, the Company is limited to use Effective The composition of accounts payable and Date NOLs to the extent that built-in gains (excess accrued expenses follows: of fair market value over tax basis at October 8, Sepcember 30, 1992) are recognized in asset sales that occur In thousands 1997 1996 through October 8, 1997. As the Company will Trade payables $ 25,236 $ 20,219 be unable to recognize a significant portion of the Deposits 10,050 8,044 remaining Effective Date NOLs, the accompanying Accrued salaries and wages 9,026 5,705 financial statements and tables of deferred items Properry caxes 5,943 3,182 Liability to complete real estate sold 7,336 1,948 below do not recognize any benefits related to Other accruals 12,580 8,998 the remaining Effective Date NOLs, except to the $ 70,171 $ 48,096 extent realized. To the extent any additional tax . _ -.,...__...,J..~...rV Notes to Consolidated Financial Statements (continued) benefits from these Effective Date NOLs are Significant components of the provision for income recognized, there will be a reduction in the taxes from continuing operations are as follows (in reorganization value in excess of amounts allocable thousands): to identifiable assets recorded at October 8, 1992. _ Years ended Sepcember 30, During the years ended September 30, 1996 and 1997 1996 1995 1995, the Company recognized the benefit of Currenc: Effective Date tax attributes which were recorded Federal $ 5,411 $1,502 $ 621 State 997 221 354 as reductions to the reorganization value in excess Totalcurrent 6,408 1,723 975 of amounts allocable to identifiable assets of Deferred: $814,000 and $278,000, respectively. Federal 6,850 2,065 2,066 Deferred income taxes reflect the net tax effects Stace 727 435 834 of temporary differences between the carrying Total deferred 7,577 2,500 2,900 amounts of assets and liabilities for financial $ 13,985 $ 4,223 $ 3,875 reporting purposes and income tax purposes. Significant components of the Company's deferred For the fiscal years ended September 30, 1997, 1996 tax liabilities and assets as of September 30, 1997 and 1995, the Company recognized income tax and 1996 are as follows (in thousands): benefits pertaining to the exercise of stock options Years.ended September 30, and restricted stock of $5,509,000, $355,000 and 1997 1996 $288,000, respectively, which are accounted for as Deferred income tax liabilicies: direct increase to additional paid in capital and do Fixed assets $ 66,324 $ 35,916 56 Incangible assecs 20,600 19,928 not reduce reported income tax expense. Tocal 86,924 55,844 A reconciliation of the income tax provision Gross deferred income tax assets: from continuing operations and the amount Deferred compensation 1,941 3,081 computed by applying the U.S. federal statutory Nec operacing loss carryforwards ' 45,649 46,356 income tax rate to income from continuing Minimum tax credic 1,729 1,208 operations before income taxes is as follows Oeher, nec 4,490 5,443 (in thousands): Total 53,809 56,088 Years ended September 30, Ualuation allowance for 1997 1996 1995 deferred income tax assets (28,122) (22,544) At U.S. federal income Deferred income tax assets, tax rate $ 11,789 $ 3,135 $ 2,505 net of valuation allowance 25,687 33,544 State income tax, Net deferred income tax liability $ 61,237 $ 22,300 net of federal benefit 1,121 426 714 Excess Reorganization The net current and noncurrent components of Value amortization 1,290 773 727 deferred income taYes recognized in the September Other (215) (111) (71) 30, 1997 and 1996 balance sheet are as follows (in $ 13,985 $ 4,223 $ 3,875 thousands): Years ended September 30, Note 8. Related Party Transacrions ~ 1997 1996 * * * * Net current deferred Corporate expense for each of the years ended income tax assec $ 24,500 $ 17,200 September 30, 1997, 1996 and 1995 includes an Nec noncurrent de£erred annual fee of $500,000 for management services income tax liability 85,737 39,500 f provided by an affiliate of the majority holder of Net deferred income tax liability $ 61,237 $ 22,300 ~ the Company's Common Stock. This fee is generally development. Rather than payment of an earnest settled partially through use of the Company's money deposit with the entire balance due in cash facilities and partially in cash. At September 30, at closing, these contracts provide for no earnest 1997, the Company's liability with respect to this money deposit with the entire purchase price arrangement was $673,000. (which was below fair market value) paid under Vail Associates has the right to appoint 4 of promissory notes of $438,750 and $350,000 for 9 directors of the Beaver Creek Resort Company Mr. Daly's spouse and Mr. and Mrs. Thompson, (Resort Company), a non-profit entity formed for respectively, each secured by a first deed of trust the benefit of property owners in Beaver Creek. and amortized over 25 years at 8% per annum Uail Associates has a management agreement with interest, with a balloon payment due on the earlier the Resort Company, renewable for one-year of five years from the date of closing or one year periods, to provide management services on a from the date employment with the Company is fixed fee basis. In addition, in accordance with a terminated. The promissory notes were executed cash flow agreement effective through 2000, Vail upon the closings of the lot sales in December 1996. Associates will fund the cash needs of the Resort Company that are not otherwise met through Note 9. Commitments and Contingencies the Resort Company's operations or borrowings. * * * * During fiscal years 1991 through 1997, the As of September 30, 1997, the Company had Resort Company was able to meet its operating entered into real estate contracts for the sale of requirements through its own operations. certain real estate and related amenities for gross Management fees and reimbursement of operating proceeds of approximately $29.6 million. The 57 expenses paid to the Company under its agreement Company estimates that subsequent to September with the Resort Company during fiscal years 1997, 30, 1997, it will incur additional holding and 1996 and 1995 totaled $4.9 million, $5.5 million infrastructure costs of $31.6 million in connection and $7.0 million, respectively. Related amounts with the sale of the properties under contract and due the Company at September 30, 1996 were properties closed as of September 30, 1997. The $599,000. All amounts due the Company have been Company has entered into repurchase agreements paid as of September 30, 1997. with certain developers who have purchased real In 1991, the Company loaned to Andrew P. estate from the Company to repurchase certain Daly, the Company's President, $300,000, $150,000 retail and residential space in the completed of which bears interest at 9% and the remainder of developments. At September 30, 1997, the which is non-interest bearing. The principal sum Company has agreed to repurchase various retail and plus accrued interest is due no later than one year residential space for amounts totaling $10.0 million. following the termination, for any reason, of On September 25, 1996, the Company declared Mr. Daly's employment with the Company. The a right to receive up to $2.44 per share of Common proceeds of the loan were used to finance the Stock (the "Rights") to all stockholders of record on purchase and improvement of real property. The October 11, 1996, with a maximum aggregate loan is secured by a deed of trust on such property. amount payable under the Rights of $50.5 rnillion. In 1995, Mr. Daly's spouse and James P. The Company was obligated to make payments Thompson, President of VRDC, and his spouse under the Rights only to the extent it receives received financial terms more favorable than those proceeds under certain real estate contracts available to the general public in connection with outstanding at September 30, 1996. As of September their purchase of lots in the Bachelor Gulch 30, 1997, the Company has received gross proceeds Notes to Consolidated Financial Statements (continued) under the applicable contracts totaling $49.9 million of this aggregate subsidy to be $16.8 million at and has made payments under the Rights of $42.2 September 30, 1997. The Company has allocated million. In addition, the Company's former $8.3 million of that amount to the Bachelor Gulch Chairman and Chief Executive Officer waived his Village single family homesites which were sold as right to receive approximately $2.7 rrullion under the of September 30, 1997 and has recarded that Rights in exchange for the payment of the exercise amount as a liabiliry in the accompanying financial price on certain stock warrants that he held. On statements. The total subsidy incurred as of October 31, 1997, the Company paid all remaining September 30, 1997 and 1996 was $1,131,168 and amounts due under the Rights. $684,642, respectively. Smith Creek Metropolitan District ("SCMD") At September 30, 1997, the Company has and Bachelor Gulch Metropolitan District various other letters of credit outstanding in the ("BGMD") were organized in November 1994 aggregate amount of $17.0 million. to cooperate in the financing, construction and The Company has executed operating leases operation of basic public infrastructure serving the for the rental of office space, employee residential Company's Bachelor Gulch Village development. units and office equipment though fiscal 2009. For SCMD was organized primarily to own, operate the years ended September 30, 1997, 1996 and and maintain water, street, traf~'ic and safety, 1995, lease expense related to these agreements of transportation, fire protection, parks and recreation, $6.2 million, $3.8 million and $3.8 million, television relay and translation, sanitation and certain respectively, is included in the accompanying other facilities and equipment of the BGMD. consolidated statements of operations. 58 SCMD is comprised of approximately 150 acres Future minimum lease payments under these of open space land owned by the Company and leases as of September 30, 1997 are as follows: members of the Board of Directors of the SCMD. In two planned unit developments, Eagle County Due during fiscal year ending September 30: has granted zoning approval for 1,395 dwelling 1998 $4,183,769 1999 2,931,506 units within Bachelor Gulch Village, including various single family homesites, cluster home and 2000 2,269,587 2001 1,931,717 townhome, and lodging units. As of September 30, 2002 1,170,907 1997, the Company has sold 65 single family Thereafter 6,710,671 homesites, has entered into contracts for the sale Tocal $19,198,157 of 35 additional single family homesites and is preparing to offer additional parcels of land to The Company is a parry to various lawsuits arising individuals and developers for the construction of in the ordinary course of business. In the opinion various types of dwelling units. Currently, SCMD of management, all matters are adequately covered has outstanding $44.5 million of variable rate by insurance or, if not covered, are without merit revenue bonds maturing on October 1, 2035, which or are of such kind, or involve such amounts as have been enhanced with a$47.2 million letter of would not have a material effect on the financial credit issued against the Company's Credit Facilities. position, results of operations and cash flows of ~ It is anticipated that as the Bachelor Gulch the Company if disposed of unfavorably. community expands, BGMD will become self I supporting and that within 25 to 30 years will issue Note 10. Business Segments ' general obligation bonds, the proceeds of which will be used to retire the SCMD revenue bonds. Until The Company currently operates in two business that time, the Company has agreed to subsidize the segments, Resorts and Real Estate. Data by segment I~ interest payments on the SCMD revenue bonds. is as follows: ~ The Company has estimated that the present value ~ I ~ Years ended Sepcember 30, The Company has two fixed option plans. Under In thousands 1997 1996 1995 the 1993 Plan, options covering an aggregate of Nec revenues: 2,045,510 shares of Common Stock may be issued Resorts $ 259,038 $ 140,288 $ 126,349 to key employees, directors, consultants, and Real Estate 71,485 48,655 16,526 advisors of the Company or its subsidiaries and $ 330,523 $ 188,943 $ 142,875 vest in equal installments over five years. Under the Income from operations: 1996 Plan, 1,500,000 shares of Cominon Stock may Resorts $ 52,279 $ 32,250 $ 26,076 Real Estate 5,178 7,854 1,543 be issued to key employees, directors, consultants, Corporate (4,663) (12,698) (6,701) and advisors of the Company or its subsidiaries and $ 52,794 $ 27,406 $ 20,918 vest in equal installments over three to five years. Depreciation and amortization: Under both plans, the exercise price of each option Resores $ 34,044 $ 18,148 $ 17,968 equals the market price of the Company's stock on Real Estate - - - the date of the grant, and an option's maximum $ 34,044 $ 18,148 $ 17,968 term is ten years. Capical eXpenditurer. The fair value of each option grant is estimated Resorts $ 51,020 $ 13,912 $ 20,320 on the date of grant using the Black-Scholes Real Estate 56,947 40,604 22.477 option-pricing model with the following $ 107,967 $ 54,516 $ 42,797 weighted-average assumptions used for grants in Years ended September 30, 1997 and 1996, respectively: dividend yield of 0% In thousands 1997 1996 and expected volatility of 29.8% for both years; Identifiable assecs: risk-free interest rates ranging from 5.66% to 6.68%; 59 Resorts $ 411,117 $ 197,279 and expected lives ranging from 6 to 8 years. Real Estate 154,925 84,055 $ 566,042 $ 281,334 A summary of the status of the Company's two fixed stock option plans as of September 30, 1997 and 1996 and changes during the years ended on Note 11. Stock Compensation Plans those dates is presented below (in thousands, except * * * * per share amounts): At September 30, 1997, the Company has two 1997 1996 stock-based compensation plans, which are Weighced- Weighced- described below. The Company applies APB Average Average Exercise EXercise Opinion No. 25 and related Interpretations in Fixed Options Shares Price Shares Price accounting for its plans. Accordingly, no Outstanding ac compensation cost has been recognized for its beginning ofyear 3,726 $ 10 2,033 $ 8 fixed stock option plans. Had compensation cost Granced 795 23 1,711 13 Exercised (1,573) 11 for the Company's two stock-based compensation Forfeired (39) 10 (18) 7 plans been determined consistent with FASB Outstanding at Statement No. 123, the Company's net income and end of year 2,909 15 3,726 10 earnings per share would have been reduced to the Opcions exercisable pro forma amounts indicated below: ac year-end 1,384 1,177 Weighted-average fair Years ended September 30, value of options In thousands 1997 1996 granted during Net Income the year $ 10 $ S As Reported $ 19,698 $ 4,735 Pro forma 18,211 4,420 Primary earnings per share As Reported $ .64 $ •22 Pro forma .59 .21 . - Notes to Consolidated Financial Statements (continued) The following table suinmarizes information of the Board and holders of Common Stock elect about fixed stock options outstanding at September another class of directors constituting one-third of 30, 1997: the Board. At September 30, 1997 and 1996, one shareholder owned substantially all of the Class A Opcions Oucscanding Opcions Execcisable Common Stock and as a result, has effective control Weighted- Average We]ghred- Number Welghred- of the Company's Board of Directors. The Class A Range of Number Remaining Average Exercisable Average COri1TTlOri StOCIC 1S COriVeT'tlble lrit0 COTIlri10ri StOCk Exercise Outstanding Contractual Exercise at Exercise Prices at 9/30/97 Life Price 9/30/97 Price (1) at the option of the holder, (li) aUtOmltlCall); $ 6 to 11 1,753,734 6.0 years $ 8 1,312,348 $ 7 upon transfer to a non-affiliate and (iii) automatically 20 co 25 1,155,000 9.5 22 72,000 20 if less than 5,000,000 shares (as such number shall be $ 6 co 25 2,908,734 7.4 $ 14 1,384,348 $ 8 adjusted by reason of any stock split, reclassification or other similar transaction) of Class A Common During fiscal years 1997 and 1996, the Company Stock are outstanding. The Common Stock is not granted restricted stock to certain executives under convertible. Each outstanding share of Class A the 1996 Plan. The aggregate number of shares Common Stock and Common Stock is entitled to granted totaled 12,000 and 62,000 in fiscal 1997 vote on all matters subnutted to a vote of and 1996, respectively. The shares vest in equal stockholders. In January 1997, the Company increments over periods ranging from three to five increased the number of authorized shares of years. Compensation expense related to these Common Stock to 80,000,000 shares. restricted stock awards is charged ratably over the 60 respective vesting periods. Note 13. Subsequent Events On October 11, 1996 the Company's former * * * * Chairman and Chief Executive Officer waived his On October 1, 1997, the Company purchased the right to payments under the Rights with respect to assets constituting the Breckenridge Hilton for a 714,976 shares of Common Stock that he owned total purchase price of $18.6 million. The purchase and warrants to purchase 408,164 shares of Conunon price includes a cash payment of $18.1 million, Stock in exchange for the payment of the exercise $0.2 million in assumed liabilities and $0.3 million ~ price on those warrants. In addition, he exchanged to provide for contingent consideration that may 1,164,808 long-term stock options for 336,318 be paid pursuant to the purchase agreement. The shares of Common Stock. The options exercised Breckenridge Hilton is a 208-room full service and the options exchanged are reported as options hotel, located at the base of Breckenridge exercised during fiscal 1997 in the table above. Mountain, and includes dining, conference and fitness facilities. The acquisition was accounted Note 12. Capital Stock for as a purchase combination. * * * * On October 7, 1997, the Company purchased ~ The Company has two classes of Common Stock 100% of the outstanding stock of Lodge Properties, ~ outstanding, Class A Common Stock and Coinmon Inc., a Colorado corporation ("LPP'), for a total i Stock. The rights of holders of Class A Common purchase price of $30.2 million. LPI owns and ~ Stock and Common Stock are substantially identical, operates The Lodge at Uail (the "Lodge"), except that, while any Class A Common Stock is a 59-room hotel located in Vail, Colorado, and outstanding, holders of Class A Common Stock provides management services to an additional 40 i elect a class of directors that constitutes two-thirds condominiums. The Lodge includes restaurant and , conference facilities as well as other amenities. In addition to the hotel properry, LPI owns a parcel of developable land strategically located at the primary base area of Vail Mountain. In addition to the cash purchase price, the Company expects to incur approximately $92 million to complete a new wing of the hoCel which is currently under construction. The acquisition was accounted for as a purchase combination. The Company funded the above acquisitions with proceeds from iCS Revolving Credit Facilities. On October 10, 1997, the Company borrowed an additional $32 million under a new line of credit with its Credit Facility provider ("the Line of Credit"), the proceeds of which were used to reduce the Revolving Credit Facility balance. Borrowings under the Line of Credit bear interest annually at the Company's option at the rate of LIBOR (5.7% at September 30, 1997) plus a margin ranging from 0.5% to 1.25% or prime plus a margin of up to 0.125%. 61 On November 5, 1997, the Company announced the change of its fiscal year end from September 30 to July 31. Accordingly, the Company's fiscal year 1998 will end on July 31, 1998 and consist of ten months. Report by Management I` 1 ~ The Company's management is responsible for the preparation, integrity and objectiviry of the consolidated financial statements and other financial information presented in this report. The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles and reflect the effects of certain estimates and judgments made by management. The Company's management maintains an effective system of internal control designed to provide reasonable assurance that assets are safeguarded and transactions are properly recorded and executed in accordance with management's authorization. The system is continuously monitored by direct management review and by internal auditors who condua audits throughout the Company. The Company selects and trains qualified people who are provided with and expected to adhere to the Company's standards of business conduct. These standards are a key element of the Company's control system. The Company's consolidated financial statements have been audited by Arthur Andersen LLP, independent accountants. Their audits were conducted in accordance with generally accepted auditing standards, and included a review of financial controls and tests of accounting records and procedures as they considered necessary in the circumstances. The Audit Conuriittee of the Board of Directors, which consists of outside directors, meets regularly with management and the independent accountants to review accounting, reporting, auditing and internal control matters. The committee has direct and private access to both internal and external auditors. 62 & _IV Adam M. Aron James P. Donohue Chairman and Senior Vice President and Chief Executive Officer Chief Financial Officer Report of Independent Public Accountants To the Board of Directors of Vail Resorts, Inc.: We have audited the accompanying consolidated balance sheets of VAIL RESORTS, INC., formerly known as Gillett Holdings, Inc. (a Delaware corporation) and subsidiaries as of September 30, 1997 and 1996, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended September 30, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Vail Resorts, Inc. and subsidiaries as of September 30, 1997 and 1996 and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1997 in conformity with generally accepted accounting principles. 63 ARTHUR ANDERSEN LLP Denver, Colorado, November 5, 1997 ? Corporate Information Board of Directors Execurive Offices Adam M. Aron Marc J. Rowan Post 0ffiCe Box 7 Chairman of the Board of Directors Founding Principal, Vail, Colorado 81658 and Chief Executive Officer, Apollo Advisors and Lion Advisors (970) 845-2500 Vail Resorts, Inc. John J. Ryan III Annual Meering Frank Biondi Financial Advisor February 24, 1998 Chairman and Chief Executive Officer, John F. Sorte New York, N.Y. Universal Studios Inc. President, New Street Advisors, L.P. Common Stock Leon D. Black Bruce H. Spector Vail Resorts, InC. Common Fouriding Priricipnl, Principal, Apollo Advisors II, L.P. stock is listed and traded on the Apollo Advisors and Lion Advisors William P. Stiritz New York Stock Exchange Craig M. Cogut Chairman of the Board, (MTN). Private Investor Ralston Purina Company Independent Auditors Andrew P. Daly James S. Tisch Arthur Andersen LLP President, I/ail Resorts, Inc. President and Denver, Colorado Stephen C. Hilbert Chief Operating Officer, Counsel Chairman, President and Loews Corporation Cahill Gordon & Reindel Chief Executive O~/'icer, New York, N.Y. Conseco, Inc. 64 Transfer Agent and Registrar Robert A. Katz Norwest Bank Prina'pal, Apollo Advisors and Minnesota, N.A. Lion Advisovs Form 10-K Thomas H. Lee A eopy of the Cotnpany's Form Founder and President, 10-K, as filed with the 77iomas H. Lee Company Securities and Exchange William L. Mack Commission, is available President and Managing Partner, without Charge by wrlting to: The Mack Organization Investor Relations Antony P. Ressler Vall Resorts, Inc. Founding Principal, Post Offlce Box 7 Apollo Advisors and Lion Advisors Vail, Colorado 81658 Joe R. Micheletto Website Chief Executive Officer and President, wwwvailresorts.com Ralcorp Holdings, Inc. C 1997 Vail Resorts, Iuc. Design: Martin Design Associates Photography: Jack Af}leck, Dan Coffey, Ken Redding Carl Scofield and Bob Winsett ~ Printed on recyded paper Officers Adam M. Aron Christopher P. Ryman Yail Resorts Development Company Chairman of the Board of Directon and Senior Vice President and Chief ExecuNve Ojficer Chief OperaNng Officeg I/ail/Beaver Creek Andrew P. Daly James P. Thompson Pruident Bri2n D. Sm1th President Senior Vice Pfesident, Sales Jarnes P. Donohue Edward O'Brien Stnim Vice Presidmt and Douglass C. Cogswell Senior V'ue President and Chief Finattcial Offiter Vice Preside?+t, Ckief Fittancial O,Quer William A. Jensen ~~lBeaver Creek Resort Propmm Roger T. Beck Senior Vice President and Elizabeth J. Cole Vice President, Chief Operaring Ofter, Vice P?esident, Breckenridge Development Breckenridge Business Development David G. Carbin Bruce W. Mainzer Charles S. L'Esperance vice President, Development Senior Vice President, Marketing Vue P?esident, ormat&m S stems Jack D. Hunn James S. Mandel I _ " Y v'ue rmsident, ' Senior Vice President and General Coutuel Paul A. Testwuide Design and Conshuction V'ue President, John W. Rutter yail/Beaver Creek Mountain OperaNons J. Patrick Maher Senior Vice President and Vice President, Development Chief Operating Offlcer, Eric C. Resnick Keystone Treasuier ~ ~¦~~~^t ~~r r . . s , , ~ ~ ~ • ~ , 4 . ~ 4~ .3-+..... .~..$-e-' _ . ~ . ~ . ~ ~ ~ A?'~.~:~ . . " . e ' ~A^'~ • ,y d L: ~``,fy~ t -i . . ~ ~ . . ~ . ~ _ . ~ . . ~ . . ~ ~1 ~ . . . ~ • ~ . ~ , ~ . • • ~ ~ i pk J . ~ ' 00~ ~~~F- ~ • X ~ e~, .'M t ~ , ~ a , da'.~ . ' ~ . . . . . . . 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